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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 4, 1994
REGISTRATION NO. 33-55191
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 2
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMR CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 4512 75-1825172
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
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P.O. BOX 619616
DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616
(817) 963-1234
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive offices)
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ANNE H. MCNAMARA, ESQ. JOHN B. BRADY, JR., ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL DEBEVOISE & PLIMPTON
AMR CORPORATION 875 THIRD AVENUE
P.O. BOX 619616 NEW YORK, NEW YORK 10022
DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616 (212) 909-6000
(817) 963-1234
(Name, address, including ZIP code, and telephone number of agents for service)
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Copy to:
ROHAN S. WEERASINGHE, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 848-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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AMR CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
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FORM S-4 ITEM NO. CAPTION IN PROSPECTUS
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1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................. Facing Page, Outside Front Cover
Page; Cross Reference Sheet; Inside
Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus..................................... Inside Front Cover Page;
Incorporation of Certain Documents by
Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information.......................... Prospectus Summary; Special
Considerations Relating to the
Debentures; The Company; Ratio of
Earnings to Combined Fixed Charges
and Preferred Stock Dividends;
Selected Consolidated Financial
Data
4. Terms of the Transaction......................... The Exchange Offer; Description of
Debentures; Certain Federal Income
Tax Considerations; Certain Federal
Tax Considerations for Non-United
States Persons
5. Pro Forma Financial Information.................. Not Applicable
6. Material Contacts with the Company Being
Acquired....................................... Not Applicable
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be
Underwriters................................... Not Applicable
8. Interests of Named Experts and Counsel........... Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................... Not Applicable
10. Information with Respect to S-3 Registrants...... Incorporation of Certain Documents by
Reference
11. Incorporation of Certain Information by
Reference...................................... Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants.................................... Not Applicable
13. Incorporation of Certain Information by
Reference...................................... Not Applicable
14. Information with Respect to Registrants Other
than S-3 or S-2 Registrants.................... Not Applicable
15. Information With Respect to S-3 Companies........ Not Applicable
16. Information with Respect to S-2 or S-3
Companies...................................... Not Applicable
17. Information with Respect to Companies Other Than
S-3 or S-2 Companies........................... Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited............. Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in an
Exchange Offer................................. Incorporation of Certain Documents by
Reference
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Subject to Completion, dated October , 1994
PROSPECTUS
AMR CORPORATION
OFFER TO EXCHANGE
% CONVERTIBLE SUBORDINATED QUARTERLY INCOME CAPITAL SECURITIES DUE 2024
("CONVERTIBLE QUICSSM")
FOR SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
---------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON NOVEMBER , 1994, UNLESS EXTENDED.
---------------------------
AMR Corporation (the "Company"), a Delaware corporation, hereby offers, upon
the terms and subject to the conditions set forth in this Prospectus (the
"Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with the Prospectus, constitute the "Exchange
Offer"), to exchange up to $1,100,000,000 aggregate principal amount of
debentures designated as its % Convertible Subordinated Quarterly Income
Capital Securities due 2024 (the "Debentures") for up to all of the outstanding
Series A Cumulative Convertible Preferred Stock of the Company (the "Preferred
Stock"). The Debentures are offered in minimum denominations of $1,000 and
integral multiples thereof, and the Preferred Stock has a liquidation preference
of $500 per share. Consequently, the Exchange Offer will be effected on a basis
of $1,000 principal amount of Debentures for every two (2) shares of Preferred
Stock validly tendered and accepted for exchange. The Company will pay amounts
of less than $1,000 due to exchanging shareholders in cash, in lieu of issuing
Debentures with a principal amount of less than $1,000. The dividend on the
Preferred Stock payable on November 1, 1994 will be payable to shareholders of
record on October 15, 1994 regardless of when shares of the Preferred Stock are
tendered pursuant to the Exchange Offer. Dividends accumulated after November 1,
1994 will not be paid on Preferred Stock accepted for exchange in the Exchange
Offer. In lieu thereof, holders of Debentures will be entitled to interest from
November 1, 1994, as described below.
Ownership of the Preferred Stock may be evidenced by certain $3.00 Depositary
Shares (the "Depositary Shares"). Each Depositary Share represents 1/10 of a
share of Preferred Stock, and entitles the owner, proportionately, to all the
rights and preferences of the Preferred Stock represented thereby. Either
Depositary Shares or Preferred Stock may be tendered in the Exchange Offer. See
"The Exchange Offer -- General".
The Company will accept for exchange Preferred Stock validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on November , 1994, or if
extended by the Company, in its sole discretion, the latest date and time to
which extended (the "Expiration Date"). The Exchange Offer will expire on the
Expiration Date. Tenders of Preferred Stock may be withdrawn at any time prior
to the Expiration Date and, unless accepted for exchange by the Company, may be
withdrawn at any time after forty business days after the date of this
Prospectus. The Company expressly reserves the right to (i) extend, amend or
modify the terms of the Exchange Offer in any manner and (ii) withdraw or
terminate the Exchange Offer and not accept for exchange any Preferred Stock, at
any time for any reason, including (without limitation) if fewer than 400,000
shares of Preferred Stock are tendered (which condition may be waived by the
Company). See "The Exchange Offer -- Expiration Date; Extensions; Amendments;
Termination".
The Debentures will mature on November 1, 2024 and will bear interest at an
annual rate of % from the first day following the Expiration Date (the "Issue
Date"). In addition, holders of the Debentures will be entitled to interest at a
rate of 6.0% per annum from November 1, 1994 through the Expiration Date in lieu
of dividends accumulating after November 1, 1994 on their Preferred Stock
accepted for exchange, payable at the time of the first interest payment on the
Debentures. Interest will be payable quarterly in arrears on February 1, May 1,
August 1, and November 1 of each year, commencing February 1, 1995, provided
that, so long as the Company shall not be in default in the payment of interest
on the Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with New York Stock Exchange rules at any time
during the term of the Debentures, to extend the interest payment period from
time to time for a period not exceeding 20 consecutive calendar quarters (each,
an "Extension Period"). No interest shall be due and payable during an Extension
Period, but at the end of each Extension Period the Company shall pay all
interest then accrued and unpaid on the Debentures, together with interest
thereon, compounded quarterly. Upon the termination of any Extension Period and
the payment of all interest then due, the Company may commence a new Extension
Period. After prior notice by public announcement given in accordance with New
York Stock Exchange rules, the Company also may prepay at any time all or any
portion of the interest accrued during an Extension Period. Consequently, there
could be multiple Extension Periods of varying lengths (up to six Extension
Periods of 20 consecutive calendar quarters each or more numerous shorter
Extension Periods) throughout the term of the Debentures. The Company has no
current intention of exercising its right to extend an interest payment period.
However, should the Company determine to exercise such right in the future, the
market price of the Debentures is likely to be affected. See "Special
Considerations Relating to the Debentures" and "Description of
Debentures -- Interest" and "-- Option to Extend Interest Payment Period".
Each Debenture is convertible at the option of the holder at any time after
the date of original issuance thereof, unless previously redeemed, into shares
of common stock, par value $1.00 per share, of the Company (the "Common Stock"),
at a conversion price of $79.00 per share of Common Stock (equivalent to 12.658
shares of Common Stock per $1,000 principal amount of Debentures converted).
Such conversion price is subject to adjustment in certain events, including a
Non-Stock Fundamental Change or Common Stock Fundamental Change (each as defined
herein). See "Description of Debentures -- Conversion". On , 1994, the
last reported sale price of the Common Stock on the New York Stock Exchange was
$ per share.
The Debentures are redeemable at any time after February 1, 1996 at the
option of the Company, in whole or in part, initially at a redemption price of
104.2% of the principal amount of the Debentures redeemed, and thereafter at
prices declining ratably to 100% of the principal amount of the Debentures
redeemed from and after February 1, 2003, plus interest accrued and unpaid to
the redemption date. No sinking fund will be established for the payment of the
Debentures. See "Description of Debentures -- Redemption". The Debentures are
unsecured obligations of the Company and will be subordinate to all Senior
Indebtedness (as defined herein) of the Company. Because the Company is a
holding company that conducts business through its subsidiaries, the Debentures
are also effectively subordinated to all existing and future obligations of the
Company's subsidiaries. On June 30, 1994, approximately $6.3 billion of such
Senior Indebtedness and approximately $ billion of additional indebtedness,
leases and other obligations of the Company's subsidiaries not included in
Senior Indebtedness were outstanding. See "Description of
Debentures -- Subordination".
For federal income tax purposes, the exchange of Preferred Stock for
Debentures will, depending upon each particular exchanging holder's facts and
circumstances, be treated as either an exchange in which gain or loss is
recognized or as a dividend, and the Debentures will be treated as having been
issued with original issue discount. For a discussion of these and other United
States federal income tax considerations relevant to the Exchange Offer, see
"Certain Federal Income Tax Considerations" and "Certain Federal Tax
Considerations for Non-United States Persons".
SEE "SPECIAL CONSIDERATIONS RELATING TO THE DEBENTURES" FOR A DISCUSSION OF
CERTAIN FACTORS RELATING TO THE DEBENTURES THAT SHOULD BE CONSIDERED BY
INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Debentures constitute a new issue of securities with no established
trading market. While the Company intends to apply to list the Debentures on the
New York Stock Exchange, there can be no assurance that an active market for the
Debentures will develop. The Depositary Shares, the Preferred Stock represented
thereby and the Common Stock issuable upon conversion of such Preferred Stock
have not been and will not be registered under the Securities Act of 1933 and
are subject to certain restrictions on transfer provided for therein. Such
restrictions will continue to apply to Depositary Shares, the Preferred Stock
represented thereby and the Common Stock issuable upon conversion of such
Preferred Stock that is not exchanged for Debentures. Moreover, to the extent
that Preferred Stock or Depositary Shares are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Preferred Stock or
Depositary Shares could be adversely affected.
Lehman Brothers and Goldman Sachs & Co. have been retained as Dealer Managers
to solicit exchanges of Preferred Stock and Depositary Shares for Debentures.
See "The Exchange Offer -- Dealer Managers". D.F. King & Co., Inc. has been
retained by the Company to act as Information Agent to assist in connection with
the Exchange Offer.
---------------------------
The Dealer Managers for the Exchange Offer are:
LEHMAN BROTHERS GOLDMAN, SACHS & CO.
The date of this Prospectus is October , 1994.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such State.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE RESPECTIVE DATES AS OF WHICH INFORMATION IS
GIVEN HEREIN. THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF PREFERRED STOCK IN ANY JURISDICTION IN
WHICH THE MAKING OF THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, THE COMPANY MAY, AT ITS
DISCRETION, TAKE SUCH ACTION AS IT MAY DEEM NECESSARY TO MAKE THE EXCHANGE OFFER
IN ANY SUCH JURISDICTION AND EXTEND THE EXCHANGE OFFER TO HOLDERS OF PREFERRED
STOCK IN SUCH JURISDICTION. IN ANY JURISDICTION THE SECURITIES LAWS OR BLUE SKY
LAWS OF WHICH REQUIRE THE EXCHANGE OFFER TO BE MADE BY A LICENSED BROKER OR
DEALER, THE EXCHANGE OFFER IS BEING MADE ON BEHALF OF THE COMPANY BY THE DEALER
MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER
THE LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such material can also be inspected and copied at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, N.Y. 10005.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") filed
by the Company with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all of the information
included in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements
contained herein concerning the provisions of any document do not purport to be
complete and, in each instance, are qualified in all respects by reference to
the copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is subject to and
qualified in its entirety by such reference. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994 and June 30, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities offered hereby shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON, INCLUDING ANY BENEFICIAL OWNER OF THE PREFERRED STOCK, TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER
THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS
SHOULD BE DIRECTED TO THE CORPORATE SECRETARY OF THE COMPANY AT P.O. BOX 619616,
MAIL DROP 5675, DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616 (TELEPHONE
817-963-1234). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE NOT LATER THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
2
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.................................................................... 4
Special Considerations Relating to the Debentures..................................... 8
The Company........................................................................... 9
Price Range of Common Stock and Dividends............................................. 10
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends............. 11
Capitalization........................................................................ 11
Selected Consolidated Financial Data.................................................. 12
Recent Developments................................................................... 13
The Exchange Offer.................................................................... 13
Description of Debentures............................................................. 20
Description of Common Stock........................................................... 31
Description of Rights And Junior Preferred Stock...................................... 33
Description of Preferred Stock........................................................ 35
Description of Depositary Shares...................................................... 42
Certain Federal Income Tax Considerations............................................. 45
Certain Federal Tax Considerations for Non-United States Persons...................... 49
Legal Opinions........................................................................ 52
Experts............................................................................... 52
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3
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PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information contained elsewhere in this Prospectus.
Unless the context otherwise requires, references herein to the Company's Series
A Cumulative Convertible Preferred Stock (the "Preferred Stock") shall include
Preferred Stock represented by certain $3.00 Depositary Shares (evidenced by
depositary receipts) (the "Depositary Shares") issued pursuant to the Deposit
Agreement, dated February 4, 1993 (the "Deposit Agreement"), among the Company,
First Chicago Trust Company of New York (in such capacity, the "Depositary") and
holders from time to time of depositary receipts issued thereunder. Each
Depositary Share represents 1/10 of a share of Preferred Stock and entitles the
owner, proportionately, to all the rights and preferences of the Preferred Stock
represented thereby. Either Depositary Shares or Preferred Stock may be tendered
in the Exchange Offer. See "The Exchange Offer -- General".
THE COMPANY
The Company has three business units: the Air Transportation Group; The
SABRE Group; and the AMR Management Services Group. The Air Transportation Group
includes the Passenger and Cargo Divisions of American Airlines, Inc.
("American"), the Company's principal subsidiary, and AMR Eagle, Inc. American's
passenger division is one of the largest scheduled passenger airlines in the
world. The SABRE Group includes the Company's information technology businesses.
The AMR Management Services Group includes the Company's airline management,
aviation services, training, consulting, and investment service activities. See
"The Company" and "Recent Developments".
THE EXCHANGE OFFER
PURPOSE OF EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing the Preferred Stock with the Debentures. The
potential cash flow benefit to the Company arises because interest payable on
the Debentures should be deductible by the Company for federal income tax
purposes, while dividends payable on the Preferred Stock are not deductible. See
"The Exchange Offer -- Purpose of the Exchange Offer."
THE EXCHANGE OFFER; SECURITIES OFFERED
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Company hereby offers to exchange up to
$1,100,000,000 aggregate principal amount of debentures designated as its %
Convertible Subordinated Quarterly Income Capital Securities due 2024 (the
"Debentures") for up to all of the outstanding shares of Preferred Stock.
Exchanges will be made on a basis of $1,000 principal amount of Debentures (the
minimum permitted denomination) for every two (2) shares of Preferred Stock
validly tendered and accepted for exchange in the Exchange Offer. The Company
will pay amounts of less than $1,000 due to any exchanging shareholder in cash,
in lieu of issuing Debentures with a principal amount of less than $1,000. See
"The Exchange Offer -- Terms of the Exchange Offer".
The Debentures will mature on November 1, 2024 and will bear interest at an
annual rate of % from the first day following the Expiration Date (the "Issue
Date") or from the most recent interest payment date to which interest has been
paid or duly provided for. Interest will be payable quarterly in arrears on
February 1, May 1, August 1 and November 1 of each year, commencing February 1,
1995, provided that, so long as the Company shall not be in default in the
payment of interest on the Debentures, the Company shall have the right, upon
prior notice by public announcement given in accordance with New York Stock
Exchange rules at any time during the term of the Debentures, to extend the
interest payment period from time to time for a period not exceeding 20
consecutive calendar quarters. The Company has no current intention of
exercising its right to extend an interest payment period. However, should the
Company determine to exercise such right in the future, the market price of the
Debentures is likely to be affected. See "Special Considerations Relating to the
Debentures" and "Description of Debentures -- Option to Extend Interest Payment
Period."
The dividend on the Preferred Stock payable on November 1, 1994 will be
payable to shareholders of record on October 15, 1994, regardless of when shares
of the Preferred Stock are tendered pursuant to the
4
<PAGE> 7
Exchange Offer. Dividends accumulated after November 1, 1994 will not be paid on
Preferred Stock accepted for exchange in the Exchange Offer. In lieu thereof,
holders of the Debentures will be entitled to interest at a rate of 6.0% per
annum from November 1, 1994 through the Expiration Date, payable at the time of
the first interest payment on the Debentures. The Debentures will be issued
pursuant to an indenture, to be dated as of November 1, 1994, between the
Company and The First National Bank of Chicago, as trustee. See "Description of
Debentures".
EXPIRATION DATE; WITHDRAWALS
The Company will accept for exchange Preferred Stock, validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on November , 1994, or
if extended by the Company, in its sole discretion, the latest date and time to
which extended (the "Expiration Date"). The Exchange Offer will expire on the
Expiration Date. Tenders of Preferred Stock pursuant to the Exchange Offer may
be withdrawn at any time prior to the Expiration Date and, unless accepted for
exchange by the Company, may be withdrawn at any time after forty business days
after the date of this Prospectus. See "The Exchange Offer -- Withdrawal of
Tenders" and "-- Expiration Date; Extensions; Amendments; Termination".
EXTENSIONS, AMENDMENTS AND TERMINATION
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Preferred Stock, at any time for
any reason, including (without limitation) if fewer than 400,000 shares of
Preferred Stock are tendered (which condition may be waived by the Company). See
"The Exchange Offer -- Expiration Date; Extensions; Amendments; Termination".
PROCEDURES FOR TENDERING
Each Holder of the Preferred Stock wishing to accept the Exchange Offer
must (i) properly complete and sign the Letter of Transmittal or a facsimile
thereof (all references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) in accordance with the instructions
contained herein and therein, together with any required signature guarantees,
and deliver the same to the First Chicago Trust Company of New York, as Exchange
Agent, at either of its addresses set forth in "The Exchange Offer -- Exchange
Agent and Information Agent" and either (a) certificates for the Preferred Stock
must be received by the Exchange Agent at such address or (b) such Preferred
Stock must be transferred pursuant to the procedures for book-entry transfer
described herein and a confirmation of such book-entry transfer must be received
by the Exchange Agent, in each case prior to the Expiration Date or (ii) comply
with the guaranteed delivery procedures described herein.
Holders of Depositary Shares may effect a tender of the underlying
Preferred Stock by tendering such Depositary Shares to the Exchange Agent who,
as agent for tendering holders, will withdraw such underlying Preferred Stock
and tender it in the Exchange Offer. When tendering Depositary Shares, holders
must comply with all of the documentation and timing requirements applicable to
tenders of Preferred Stock described herein and in the Letter of Transmittal.
The Exchange Agent will not withdraw Preferred Stock underlying Depositary
Shares tendered in the Exchange Offer unless such Preferred Stock is to be
accepted for exchange by the Company. See "The Exchange Offer -- General" and
"-- Procedures for Tendering".
SPECIAL PROCEDURE FOR BENEFICIAL OWNERS
Any beneficial owner whose Preferred Stock is registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on its own behalf, such owner must, prior to
completing and executing a Letter of Transmittal and delivering its Preferred
Stock, either make appropriate arrangements to register ownership of the
Preferred Stock in such owner's name or obtain a properly completed stock power
from the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date. See "The Exchange Offer -- Procedures for Tendering -- Signature
Guarantee".
5
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GUARANTEED DELIVERY PROCEDURES
If a Holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Preferred Stock to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected in accordance with the guaranteed
delivery procedures set forth in "The Exchange Offer -- Procedures for
Tendering -- Guaranteed Delivery".
ACCEPTANCE OF SHARES AND DELIVERY OF DEBENTURES
Upon the terms and subject to the conditions of the Exchange Offer,
including the reservation by the Company of the right to withdraw or terminate
the Exchange Offer and certain other rights, the Company will accept for
exchange shares of Preferred Stock that are properly tendered in the Exchange
Offer and not withdrawn prior to the Expiration Date. Subject to such terms and
conditions, the Debentures issued pursuant to the Exchange Offer will be issued
as of the Issue Date and will be delivered as promptly as practicable following
the Expiration Date. See "The Exchange Offer -- Terms of the Exchange Offer" and
"-- Expiration Date; Extensions; Amendments; Termination".
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Preferred Stock for Debentures pursuant to the Exchange
Offer will be a taxable event. Depending on each exchanging shareholder's
particular facts and circumstances, the exchange may be treated as (i) a
transaction in which gain or loss will be recognized in an amount equal to the
difference between the fair market value of the Debentures received in the
exchange and the exchanging shareholder's tax basis in the shares of Preferred
Stock surrendered or (ii) a distribution taxable as a dividend in an amount
equal to the fair market value of the Debentures received by such exchanging
shareholder. See "Certain Federal Income Considerations" and "Certain Federal
Tax Considerations for Non-United States Persons".
Should an Extension Period occur, holders of the Debentures would continue
to accrue stated interest on the Debentures for United States federal income tax
purposes. As a result, a holder ordinarily would include such amounts in gross
income in advance of the receipt of cash, but would not receive the cash from
the Company related to such stated interest if such holder were to dispose of
its Debentures prior to the record date for payment of such interest. In
addition, because the Debentures will be treated as having been issued with
original issue discount, a holder will, in effect, be required to accrue the
difference between the fair market value of the Debentures at the time of the
exchange and the stated principal amount as interest income over the term of the
Debentures. See "Certain Federal Income Tax Considerations -- Interest and
Original Issue Discount on Debentures."
UNTENDERED SHARES
Holders of Preferred Stock who do not tender their Preferred Stock in the
Exchange Offer or whose Preferred Stock is not accepted for exchange will
continue to hold such Preferred Stock and will be entitled to all the rights and
preferences, and will be subject to all of the limitations, applicable thereto,
including without limitation the existing restrictions on transfer under the
Securities Act. See "The Exchange Offer -- Listing and Trading of Debentures and
Preferred Stock; Transfer Restrictions."
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange
Agent in connection with the Exchange Offer. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to D.F. King & Co., Inc., which has been retained by the Company to act
as Information Agent for the Exchange Offer. The address and telephone number of
the Information Agent are also set forth in "The Exchange Offer -- Exchange
Agent and Information Agent".
DEALER MANAGERS
Lehman Brothers and Goldman, Sachs & Co. have been retained as Dealer
Managers to solicit exchanges of Preferred Stock for Debentures. Questions with
respect to the Exchange Offer may be directed to at (212)
.
6
<PAGE> 9
COMPARISON OF DEBENTURES AND PREFERRED STOCK
The following is a brief summary comparison of certain of the principal
terms of the Debentures and the Preferred Stock.
<TABLE>
<CAPTION>
DEBENTURES PREFERRED STOCK
-------------------------------------- --------------------------------------
<S> <C> <C>
Interest/Dividend Rate % annual interest from the Issue Date 6% annual dividend, payable quarterly
(6.0% per annum for the period from out of funds legally available
and including November 1, 1994 through therefor on February 1, May 1, August
the Expiration Date) payable quarterly 1 and November 1 of each year, when,
in arrears on February 1, May 1, as and if declared by the Company's
August 1 and November 1 of each year, Board of Directors. All dividends on
commencing February 1, 1994, subject the Preferred Stock have been paid to
to the Company's right to extend the date and the Company has declared the
interest payment period from time to dividend payable on November 1, 1994
time to a period of up to 20 to holders of record on October 15,
consecutive calendar quarters, as 1994. In the event dividends are not
described herein. At the end of each paid on a dividend payment date in the
Extension Period the Company shall pay future, holders would not be entitled
to the holders all interest then to receive interest on any dividend
accrued and unpaid, together with arrearages.
interest thereon, compounded
quarterly, at the rate of interest on
the Debentures.
Conversion Convertible into Common Stock at a Convertible into Common Stock at a
conversion price of $79.00 per share conversion price of $78.75 per share
of Common Stock (equivalent to 12.658 of Common Stock (equivalent to 6.349
shares of Common Stock per $1,000 shares of Common Stock per $500
principal amount of Debentures liquidation preference of Preferred
converted), subject to adjustment as Stock converted), subject to
described herein. adjustment as described herein.
Optional Redemption Redeemable at the option of the Redeemable at the option of the
Company at any time on or after Company at any time on or after
February 1, 1996, in whole or in part, February 1, 1996, in whole or in part,
initially at a redemption price of initially at a redemption price of
104.2% of the principal amount of the 104.2% of the liquidation preference
Debentures redeemed, declining ratably of the Preferred Stock redeemed,
to 100% of the principal amount of the declining ratably to 100% of the
Debentures redeemed from and after liquidation preference of the
February 1, 2003, in each case plus Preferred Stock redeemed from and
accrued and unpaid interest to the after February 1, 2003, in each case
date fixed for redemption. plus accumulated and unpaid dividends
to the date fixed for redemption.
Subordination Subordinated to all existing and Subordinate to claims of creditors,
future Senior Indebtedness of the including holders of the Company's
Company, and effectively subordinated outstanding debt securities and the
to all obligations of the Company's Debentures, and effectively
subsidiaries, but senior to preferred subordinated to all obligations of the
stock of the Company, including the Company's subsidiaries, but senior to
Preferred Stock, and to the Common the Common Stock.
Stock. On June 30, 1994, approximately
$6.3 billion of such Senior
Indebtedness and approximately $
billion of additional indebtedness,
leases and other obligations of the
Company's subsidiaries not included in
Senior Indebtedness were outstanding.
Voting Rights None. None, except in certain circumstances.
Transfer Restrictions; The Debentures and the Common Stock The Depositary Shares, the Preferred
New York Stock Exchange issuable upon conversion thereof will Stock represented thereby and the
Listing be registered under the Securities Act Common Stock issuable upon conversion
and will be transferable to the extent of such Preferred Stock have not been
permitted thereunder. Application will and will not be registered under the
be made to list the Debentures on the Securities Act and have not been and
New York Stock Exchange. will not be listed on the New York
Stock Exchange. The Depositary Shares,
the Preferred Stock represented
thereby and such Common Stock are
subject to certain significant
restrictions on their transfer under
the Securities Act, and unexchanged
Depositary Shares, Preferred Stock and
Common Stock issued upon conversion
thereof will remain subject to such
transfer restrictions.
Dividends Received Interest will not be eligible for the Dividends are eligible for the
Deduction dividends received deduction for dividends received deduction for
corporate shareholders. corporate shareholders.
</TABLE>
7
<PAGE> 10
SPECIAL CONSIDERATIONS RELATING TO THE DEBENTURES
Prospective exchanging shareholders should carefully consider, in addition
to the other information set forth in this Prospectus, the following:
EXCHANGE OFFER AS TAXABLE EVENT
The exchange of Preferred Stock for Debentures pursuant to the Exchange
Offer will be a taxable event. Depending on each exchanging shareholder's
particular facts and circumstances, the exchange may be treated as (i) a
transaction in which gain or loss will be recognized in an amount equal to the
difference between the fair market value of the Debentures received in the
exchange and the exchanging shareholder's tax basis in the shares of Preferred
Stock surrendered or (ii) a distribution taxable as a dividend in an amount
equal to the fair market value of the Debentures received by such exchanging
shareholder. See "Certain Federal Income Tax Considerations" and "Certain
Federal Tax Considerations for Non-United States Persons." All holders of
Preferred Stock are advised to consult their own tax advisors regarding the
federal, state, local and foreign tax consequences of the exchange of Preferred
Stock.
RIGHT OF COMPANY TO DEFER INTEREST
So long as the Company shall not be in default in the payment of interest
on the Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with New York Stock Exchange rules at any time
during the term of the Debentures, to extend the interest payment period from
time to time for a period not exceeding 20 consecutive calendar quarters (each,
an "Extension Period"). No interest shall be due and payable during an Extension
Period, but on the interest payment date occurring at the end of each Extension
Period the Company shall pay to the holders of record on the record date for
such interest payment date (regardless of who the holders of record may have
been on other dates during the Extension Period) all accrued and unpaid interest
on the Debentures, together with interest thereon, compounded quarterly.
Upon the termination of any Extension Period and the payment of all
interest then due, the Company may commence a new Extension Period. After prior
notice given by public announcement in accordance with New York Stock Exchange
rules, the Company may also prepay at any time all or a portion on the interest
accrued during an Extension Period. Consequently, there could be multiple
Extension Periods of varying lengths (up to six Extension Periods of 20
consecutive calendar quarters each or more numerous shorter Extension Periods)
throughout the term of the Debentures.
The Company has no current intention of exercising its right to defer an
interest payment period. However, should the Company determine to exercise such
right in the future, or should the Company thereafter extend an Extension Period
or prepay interest accrued during an Extension Period, the market price of the
Debentures is likely to be affected. As a result, it is possible that, in the
event the Company exercises such right, the market price of the Debentures may
be more volatile and a holder's return on its investment in the Debentures may
be affected. See "Description of Debentures -- Option to Extend Interest Payment
Period."
NO CASH PAYMENTS DURING EXTENSION PERIOD TO PAY ACCRUED TAX LIABILITY; ORIGINAL
ISSUE DISCOUNT
Should an Extension Period occur, holders of the Debentures would continue
to accrue stated interest on the Debentures for United States federal income tax
purposes. As a result, a holder ordinarily would include such amounts in gross
income in advance of the receipt of cash, but would not receive the cash from
the Company related to such stated interest if such holder were to dispose of
its Debentures prior to the record date for payment of such interest. The extent
to which a holder would receive amounts attributable to such stated interest
upon a disposition of its Debentures during an Extension Period will depend on
the market for the Debentures at such time. In addition, because the Debentures
will be treated as having been issued with original issue discount, a holder
will, in effect, be required to accrue the difference between the fair market
value of the Debentures at the time of the exchange and the stated principal
amount as interest income over the term of the Debentures. See "Certain Federal
Income Tax Considerations -- Interest and Original Issue Discount on
Debentures."
SUBORDINATION OF DEBENTURES
The Debentures are unsecured obligations of the Company and will be
subordinate to all Senior Indebtedness (as defined) of the Company. Because the
Company is a holding company that conducts business through its subsidiaries,
the Debentures will also be effectively subordinated to all existing and future
obligations of the Company's subsidiaries. On June 30, 1994, approximately $6.3
billion of such Senior Indebtedness and approximately $ billion of
additional indebtedness, leases and other obligations of the Company's
subsidiaries not included in Senior Indebtedness were outstanding. See
"Description of Debentures -- Subordination."
8
<PAGE> 11
THE COMPANY
The Company was incorporated in 1982 and its principal subsidiary,
American, was founded in 1934. The Company's three business units are the Air
Transportation Group, The SABRE Group and the AMR Management Services Group.
The Air Transportation Group includes American's Passenger and Cargo
Divisions and AMR Eagle, Inc. American's Passenger Division is one of the
largest scheduled passenger airlines in the world. At the end of 1993, American
provided scheduled jet service to 106 cities in the U.S. mainland and Hawaii, 28
in Latin America, 14 in Europe and 24 other destinations worldwide, including
service to six cities provided through cooperative agreements with other
airlines.
The SABRE Group includes the Company's information technology business. The
AMR Management Services Group includes the Company's airline management,
aviation services, training, consulting, and investment service activities.
More detailed descriptions of the Company's three business units, and their
recent operating results, are included in the Company's Annual Report on Form
10-K for the year ended December 31, 1993 and its Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994.
9
<PAGE> 12
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed on the New York Stock Exchange (the "NYSE") and
traded under the symbol AMR. The following table sets forth, for the calendar
periods indicated, the high and low closing sales prices per share of the Common
Stock as reported on the NYSE Composite Tape. The last reported sale price of
the Common Stock on the NYSE on October , 1994 was $ per share.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
1991
1st Quarter........................................................ $62 1/4 $44 3/8
2nd Quarter........................................................ 67 3/4 57 1/4
3rd Quarter........................................................ 66 1/2 55 7/8
4th Quarter........................................................ 70 1/2 54 3/4
1992
1st Quarter........................................................ $79 1/4 $69 3/8
2nd Quarter........................................................ 73 61 6/8
3rd Quarter........................................................ 66 7/8 55 1/4
4th Quarter........................................................ 67 1/2 55
1993
1st Quarter........................................................ $69 5/8 $55 5/8
2nd Quarter........................................................ 72 5/8 60 1/2
3rd Quarter........................................................ 67 5/8 59 5/8
4th Quarter........................................................ 71 3/4 63 7/8
1994
1st Quarter........................................................ $71 3/4 $56 1/2
2nd Quarter........................................................ 60 3/4 52 1/4
3rd Quarter (through September 30, 1994)........................... 62 7/8 51 1/2
</TABLE>
On February 13, 1986, the Board of Directors of the Company declared a
dividend of one Right for each outstanding share of the Common Stock to
stockholders of record on February 24, 1986. See "Description of Rights and
Junior Preferred Stock." Except for such dividend, no dividends have been paid
on the Common Stock and, prior to October 1, 1982 (the date as of which the
Company became the parent of American), no dividends had been paid on the common
stock of American after the first quarter of 1980.
10
<PAGE> 13
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends for the Company for the periods indicated.
Earnings represent consolidated earnings (loss) before income taxes and the
cumulative effect of accounting changes and fixed charges (excluding interest
capitalized). Fixed charges consist of interest and the portion of rental
expense deemed representative of the interest factor. The preferred stock
dividend requirements were assumed to be equal to the pre-tax earnings that
would be required to cover such dividend requirements. The amount of such
pre-tax earnings required to cover preferred stock dividends was computed using
the Company's effective tax rate for the applicable year. During 1989, the
Company redeemed all the outstanding shares of no par preferred auction rate
stock issued in 1987. The Company had no preferred stock outstanding from the
end of 1989 until the issuance of the Preferred Stock in 1993.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- -------------
1989 1990 1991 1992 1993 1993 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed charges and
preferred stock dividends.......................... 2.11 (a) (a) (a) (a) (a) 1.26
==== ==== ==== ==== ==== ==== ====
</TABLE>
- ---------------
(a) Earnings were inadequate to cover combined fixed charges and preferred stock
dividends by $150 million for the year ended December 31, 1990; by $499
million for the year ended December 31, 1991; by $798 million for the year
ended December 31, 1992; by $224 million for the year ended December 31,
1993; and by $34 million for the six months ended June 30, 1993.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1994 and as adjusted to give effect to the Exchange Offer
(assuming that 50% and 100% of the outstanding shares of the Preferred Stock are
exchanged). The financial data at June 30, 1994 in the following table are
derived from the Company's unaudited financial statements for the quarter ended
June 30, 1994.
<TABLE>
<CAPTION>
AS ADJUSTED ASSUMING
JUNE 30, ----------------------------
1994 50% EXCHANGE 100% EXCHANGE
-------- ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C>
INDEBTEDNESS(1)
Current maturities of long-term debt.................... $ 61 $ 61 $ 61
Current obligations under capital leases................ 128 128 128
Long-term debt, less current maturities................. 5,441 5,441 5,441
Obligations under capital leases, less current
obligations.......................................... 2,269 2,269 2,269
Debentures(2)........................................... -- 550 1,100
-------- ------ -------
Total Indebtedness.............................. 7,899
-------- ------ -------
STOCKHOLDERS' EQUITY(1)
Series A Cumulative Convertible Preferred Stock......... 1,081
Common stock-76 million shares issued and outstanding... 76 76 76
Additional paid-in capital.............................. 2,038
Retained earnings....................................... 1,204 1,204 1,204
-------- ------ -------
Total Stockholders' Equity...................... 4,399
-------- ------ -------
Total Capitalization............................ $ 12,298 $ $
======== ====== =======
</TABLE>
- ---------------
(1) For additional information regarding obligations under capital leases,
long-term debt (including repayment requirements), Preferred Stock, Common
Stock and retained earnings, see notes 4, 5, 6, 8 and 9 to the audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1993. See "Incorporation of
Certain Documents by Reference".
(2) The amounts shown for the Debentures are based on their aggregate principal
amount. After the consummation of the Exchange Offer, the amounts shown for
the Debentures on the consolidated financial statements of the Company will
be based on the fair market value of the Debentures at the time of their
issuance, which is expected to be less than such aggregate principal amount.
11
<PAGE> 14
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data in the table below for each of the
five years in the period ended December 31, 1993 have been derived from audited
consolidated financial statements of the Company previously filed with the
Commission. The selected consolidated financial data in the table below as of
June 30, 1994 and for the six months ended June 30, 1993 and 1994 are unaudited
but in the opinion of management include all adjustments necessary for a fair
presentation. The following information should be read in conjunction with the
consolidated financial statements and related notes of the Company included, or
incorporated by reference, in its reports filed under the Exchange Act that are
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- ---------------
1989 1990 1991 1992(1) 1993 1993 1994
------- ------- ------- ------- ------- ------ ------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED OPERATING
DATA(2):
Total operating revenues.......... $10,480 $11,720 $12,887 $14,396 $15,816 $8,026 $7,909
Total operating expenses.......... 9,736 11,596 12,882 14,421 15,126 7,546 7,349
Operating income (loss)........... 744 124 5 (25) 690 480 560
Earnings (loss) before
extraordinary loss and
cumulative effect of accounting
changes......................... 455 (40) (240) (475) (96) 25 146
Earnings (loss) before cumulative
effect of accounting changes.... 455 (40) (240) (475) (110) 25 146
Net earnings (loss)............... 455 (40) (240) (935) (110) 25 146
Earnings (loss) per common share
before extraordinary loss and
cumulative effect of accounting
changes:
Primary......................... 7.16 (0.64) (3.54) (6.35) (2.05) (0.03) 1.48
Fully diluted................... 7.15 (0.64) (3.54) (6.35) (2.05) (0.03) 1.48
Net earnings (loss) per common
share:
Primary......................... 7.16 (0.64) (3.54) (12.49) (2.23) (0.03) 1.48
Fully diluted................... 7.15 (0.64) (3.54) (12.49) (2.23) (0.03) 1.48
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------- JUNE 30,
1989 1990 1991 1992(1) 1993 1994
------- ------- ------- ------------- ------- --------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED BALANCE SHEET
DATA(2):
Total assets.......................... $10,877 $13,354 $16,208 $18,706 $19,326 $ 19,867
Long-term debt, less current
maturities.......................... 809 1,674 3,951 5,643 5,431 5,441
Obligations under capital leases, less
current obligations................. 1,497 1,598 1,928 2,195 2,123 2,269
Obligation for postretirement
benefits............................ -- -- -- 1,006 1,090 1,058
Preferred stock....................... -- -- -- -- 1,081 1,081
Common stock and other stockholders'
equity.............................. 3,766 3,727 3,794 3,349 3,195 3,318
Common shares outstanding at end of
period.............................. 62 62 68 75 76 76
Book value per common share........... 60.50 59.82 55.50 44.41 41.92 43.49
</TABLE>
- ---------------
(1) Effective January 1, 1992, the Company adopted Statements of Financial
Accounting Standards No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions," and No. 109, "Accounting for Income Taxes."
(2) No dividends were declared on common shares during any of the periods above.
12
<PAGE> 15
RECENT DEVELOPMENTS
In November 1993, American endured a five-day strike by its flight
attendants' union; the strike ended when both sides agreed to binding
arbitration. The arbitration process is expected to be complex and will likely
not be decided for several months. While the ultimate outcome is uncertain, the
new contract will likely result in higher unit labor costs.
American's labor contract with its pilots' union became amendable on August
31, 1994. The Company and the union leadership have commenced negotiations. The
ultimate outcome of these negotiations cannot be estimated at this time.
THE EXCHANGE OFFER
GENERAL
Participation in the Exchange Offer is voluntary and Holders (as defined
below) should carefully consider whether to accept. Neither the Board of
Directors nor the Company makes any recommendation to Holders as to whether to
tender or refrain from tendering in the Exchange Offer. Holders of the Preferred
Stock are urged to consult their financial and tax advisors in making their own
decisions on what action to take in light of their own particular circumstances.
Unless the context otherwise requires, all references in this section and
throughout this Prospectus to Preferred Stock shall include Preferred Stock
represented by Depositary Shares. Holders of Depositary Shares may effect
tenders of the underlying Preferred Stock in the Exchange Offer by tendering
such Depositary Shares to the Exchange Agent who, as agent for such tendering
Holders, will withdraw such underlying Preferred Stock and tender it in the
Exchange Offer. When tendering Depositary Shares, Holders must comply with all
of the documentation and timing requirements applicable to tenders of Preferred
Stock described herein and in the Letter of Transmittal. The Exchange Agent will
not withdraw Preferred Stock underlying Depositary Shares tendered in the
Exchange Offer unless such Preferred Stock is to be accepted for exchange by the
Company. See " -- Procedures for Tendering". Unless the context requires
otherwise, the term "Holder" with respect to the Exchange Offer means (i) any
person in whose name any Preferred Stock or Depositary Shares are registered on
the books of the Company or (ii) any other person who has obtained a properly
completed stock power from the registered holder, or (iii) any person whose
Preferred Stock or Depositary Shares are held of record by The Depository Trust
Company who desires to deliver such Preferred Stock by book-entry transfer at
The Depository Trust Company. All references herein and in the Letter of
Transmittal to registered holders of Preferred Stock shall, in the case of
Preferred Stock represented by Depositary Shares, be deemed references to the
registered holder of such Depositary Shares.
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing the Preferred Stock with the Debentures. The
potential cash flow benefit to the Company arises because interest payable on
the Debentures (whether paid currently or deferred under the terms of the
Debentures) should be deductible by the Company as it accrues for federal income
tax purposes, while dividends payable on the Preferred Stock are not deductible.
The extent of this cash flow benefit, however, cannot be predicted because it
depends upon the number of shares of Preferred Stock exchanged pursuant to the
Exchange Offer and upon the Company's federal income tax position in any year.
Neither the Company's ability to defer interest payments on the Debentures nor
the lack of voting rights on the part of holders of the Debentures is a purpose
of the Company in making the Exchange Offer.
Except as described herein, the Company has no present plans or intention
to make any acquisitions of or offers for the Preferred Stock. However, if any
shares of Preferred Stock remain outstanding after the expiration of the
Exchange Offer, the Company will continue to monitor the market for the
Preferred Stock and reserves the right, in its sole discretion, to acquire and
to make offers for Preferred Stock subsequent to the Expiration Date for cash or
in exchange for other securities, by optional redemption or otherwise. The
13
<PAGE> 16
terms of any such acquisitions or offers may differ from the terms of the
Exchange Offer. Such acquisitions or offers, if any, would depend upon, among
other things, the price and availability of such shares and the Company's tax
position.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Company will exchange up to $1,100,000,000 aggregate
principal amount of Debentures for up to all of the outstanding shares of
Preferred Stock. The Debentures are offered in minimum denominations of $1,000
and integral multiples thereof, and the Preferred Stock has a liquidation
preference of $500 per share. Consequently, the Exchange Offer will be effected
on a basis of $1,000 principal amount of Debentures for every two (2) shares of
Preferred Stock validly tendered and accepted for exchange. The Company will pay
cash to tendering Holders of Preferred Stock in lieu of issuing Debentures with
a principal amount of less than $1,000. Upon the terms and subject to the
conditions set forth herein and in the Letter of Transmittal, the Company will
accept Preferred Stock validly tendered and not withdrawn as promptly as
practicable after the Expiration Date unless the Exchange Offer has been
withdrawn or terminated. The Company will not accept Preferred Stock for
exchange prior to the Expiration Date. The Company expressly reserves the right,
in its sole discretion, to delay acceptance for exchange of Preferred Stock
tendered under the Exchange Offer or the exchange of the Debentures for the
Preferred Stock accepted for exchange (subject to Rules 13e-4 and 14e-1 under
the Exchange Act, which require that the Company consummate the Exchange Offer
or return the Preferred Stock deposited by or on behalf of the Holders thereof
promptly after the termination or withdrawal of the Exchange Offer), or to
withdraw or terminate the Exchange Offer and not accept any Preferred Stock at
any time for any reason. In all cases, except to the extent waived by the
Company, delivery of Debentures in exchange for the Preferred Stock accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of Preferred Stock (or confirmation of book-entry transfer
thereof), a properly completed and duly executed Letter of Transmittal and any
other documents required thereby.
As of October 3, 1994, there were 2,200,000 shares of Preferred Stock
outstanding. This Prospectus, together with the Letter of Transmittal, is being
sent to all registered Holders as of October , 1994.
The Company shall be deemed to have accepted validly tendered Preferred
Stock (or defectively tendered Preferred Stock with respect to which the Company
has waived such defect) when, as and if the Company has given oral or written
notice thereof to the Exchange Agent. The Exchange Agent will act as agent for
the tendering Holders for the purpose of receiving the Debentures from the
Company and remitting such Debentures to tendering Holders. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of Debentures in
exchange for Preferred Stock will be made as promptly as practicable after the
Expiration Date.
If any tendered Preferred Stock is not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, unless otherwise requested by the Holder under "Special Delivery
Instructions" in the Letter of Transmittal, such Preferred Stock will be
returned, without expense, to the tendering Holder thereof (or in the case of
Preferred Stock tendered by book-entry transfer into the Exchange Agent's
account at the Depository Trust Company ("DTC"), such Preferred Stock will be
credited to an account maintained at DTC designated by the participant therein
who so delivered such Preferred Stock), as promptly as practicable after the
Expiration Date or the withdrawal or termination of the Exchange Offer.
Holders of Preferred Stock will not have any appraisal or dissenters'
rights under the General Corporation Law of the State of Delaware (the "DGCL")
in connection with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder.
Holders who tender Preferred Stock in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Preferred Stock pursuant to the Exchange Offer. See "-- Fees and Expenses".
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<PAGE> 17
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Exchange Offer will expire on the Expiration Date. The term "Expiration
Date" shall mean 5:00 p.m., New York City time, on November , 1994, unless the
Company, in its sole discretion, extends the Exchange Offer, in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended.
The Company reserves the right to extend the Exchange Offer in its sole
discretion at any time and from time to time by giving oral or written notice to
the Exchange Agent and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service. During any extension of the Exchange Offer, all
Preferred Stock previously tendered pursuant to the Exchange Offer and not
withdrawn will remain subject to the Exchange Offer.
The Company expressly reserves the right to (i) amend or modify the terms
of the Exchange Offer in any manner and (ii) withdraw or terminate the Exchange
Offer and not accept for exchange any Preferred Stock, at any time for any
reason, including (without limitation) if fewer than 400,000 shares of Preferred
Stock are tendered (which condition may be waived by the Company). If the
Company makes a material change in the terms of the Exchange Offer or if it
waives a material condition of the Exchange Offer, the Company will extend the
Exchange Offer. The minimum period for which the Exchange Offer will be extended
following a material change or waiver, other than a change in the amount of
Preferred Stock sought for exchange, will depend upon the facts and
circumstances, including the relative materiality of the change or waiver. With
respect to a change in the amount of Preferred Stock sought, the offer will be
extended for a minimum of ten business days following public announcement of
such change. Any withdrawal or termination of the Exchange Offer will be
followed as promptly as practicable by public announcement thereof. In the event
the Company withdraws or terminates the Exchange Offer, it will give immediate
notice to the Exchange Agent, and all Preferred Stock theretofore tendered
pursuant to the Exchange Offer will be returned promptly to the tendering
Holders thereof. See " -- Withdrawal of Tenders".
ACCUMULATED DIVIDENDS AND INTEREST ON DEBENTURES
The Debentures will bear interest at an annual rate of % from the
first day following the Expiration Date (the "Issue Date") or from the most
recent interest payment date to which interest has been paid or duly provided
for. The dividend on the Preferred Stock payable on November 1, 1994 will be
payable to shareholders of record on October 15, 1994, regardless of when shares
of the Preferred Stock are tendered pursuant to the Exchange Offer. Dividends
accumulated after November 1, 1994 will not be paid on Preferred Stock accepted
for exchange in the Exchange Offer. In lieu thereof, holders of Debentures will
be entitled to interest at a rate of 6.0% per annum (equal to the stated
dividend rate on the Preferred Stock) from November 1, 1994 through the
Expiration Date, payable at the time of the first interest payment on the
Debentures. See "Description of Debentures -- Interest".
PROCEDURES FOR TENDERING
The tender of Preferred Stock by a Holder thereof pursuant to one of the
procedures set forth below will constitute an agreement between such Holder and
the Company in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
Each Holder of the Preferred Stock wishing to accept the Exchange Offer
must (i) properly complete and sign the Letter of Transmittal or a facsimile
thereof (all references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) in accordance with the instructions
contained herein and therein, together with any required signature guarantees,
and deliver the same to the Exchange Agent, at either of its addresses set forth
in "-- Exchange Agent and Information Agent" and either (a) certificates for the
Preferred Stock must be received by the Exchange Agent at such address or (b)
such Preferred Stock must be transferred pursuant to the procedures for
book-entry transfer described below and a confirmation of such book-entry
transfer must be received by the Exchange Agent, in each case prior to the
Expiration Date or (ii) comply with the guaranteed delivery procedures described
below.
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<PAGE> 18
LETTERS OF TRANSMITTAL, PREFERRED STOCK AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE COMPANY, THE DEALER
MANAGERS OR THE INFORMATION AGENT.
Signature Guarantees. If tendered Preferred Stock is registered in the name
of the signer of the Letter of Transmittal and the Debentures to be issued in
exchange therefor are to be issued (and any untendered Preferred Stock is to be
reissued) in the name of the registered Holder (which term, for the purposes
described herein, shall include any participant in DTC whose name appears on a
security listing as the owner of Preferred Stock), the signature of such signer
need not be guaranteed. If the tendered Preferred Stock is registered in the
name of someone other than the signer of the Letter of Transmittal, such
tendered Preferred Stock must be endorsed or accompanied by written instruments
of transfer in form satisfactory to the Company and duly executed by the
registered Holder, and the signature on the endorsement or instrument of
transfer must be guaranteed by a financial institution (including most banks,
savings and loans associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program or The New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(any of the foregoing hereinafter referred to as an "Eligible Institution"). If
the Debentures and/or Preferred Stock not exchanged are to be delivered to an
address other than that of the registered Holder appearing on the register for
the Preferred Stock, the signature in the Letter of Transmittal must be
guaranteed by an Eligible Institution. Any beneficial owner whose Preferred
Stock is registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender should contact such registered
holder promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on its own behalf,
such owner must, prior to completing and executing a Letter of Transmittal and
delivering its Preferred Stock, either make appropriate arrangements to register
ownership of the Preferred Stock in such owner's name or obtain a properly
completed stock power from the registered holder. The transfer of registered
ownership may take considerable time and may not be able to be completed prior
to the Expiration Date.
THE METHOD OF DELIVERY OF PREFERRED STOCK AND ALL OTHER DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PRIOR INSURANCE OBTAINED,
AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Book-Entry Transfer. The Company understands that the Exchange Agent will
make a request promptly after the date of this Prospectus to establish accounts
with respect to the Preferred Stock at DTC for the purpose of facilitating the
Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in DTC's system may make book-entry delivery
of Preferred Stock by causing DTC to transfer such Preferred Stock into the
Exchange Agent's account with respect to the Preferred Stock in accordance with
DTC's procedures for such transfer. Although delivery of Preferred Stock may be
effected through book-entry transfer of Preferred Stock into the Exchange
Agent's account at DTC pursuant to DTC's Automated Tender Offer Program ("ATOP")
procedures, the tendering Holder's properly completed and duly executed Letter
of Transmittal, with any required signature guarantees, must, in any case, be
received by the Exchange Agent at its address set forth in the Letter of
Transmittal prior to the Expiration Date or the guaranteed delivery procedures
described below must be complied with.
Guaranteed Delivery. If a Holder desires to accept the Exchange Offer and
time will not permit a Letter of Transmittal or Preferred Stock to reach the
Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if the
Exchange Agent has received at its office prior to the Expiration Date, a
letter, telegram or facsimile transmission from an Eligible Institution setting
forth the name and address of the tendering Holder, the name(s) in which the
Preferred Stock is registered and, if the Preferred Stock is held in
certificated form, the certificate number of the Preferred Stock to be tendered,
and stating that the tender is being made thereby and guaranteeing that within
five NYSE trading days after the date of execution of such letter, telegram or
facsimile transmission by the Eligible Institution, the Preferred Stock in
proper form for transfer together with a properly completed and duly executed
Letter of Transmittal (and any other required documents), or a confirmation of
book-entry transfer of such Preferred Stock into the Exchange Agent's account at
DTC, will be delivered by such Eligible Institution. Unless the Preferred Stock
being tendered by the above-described method is deposited with the
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<PAGE> 19
Exchange Agent within the time period set forth above (accompanied or preceded
by a properly completed Letter of Transmittal and any other required documents)
or a confirmation of book-entry transfer of such Preferred Stock into the
Exchange Agent's account at DTC in accordance with DTC's ATOP procedures is
received, the Company may, at its option, reject the tender. Copies of a Notice
of Guaranteed Delivery which may be used by Eligible Institutions for the
purposes described in this paragraph are available from the Exchange Agent and
the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Preferred Stock will be determined by the Company, whose determination will be
final and binding. The Company reserves the absolute right to reject any or all
tenders not in proper form or the acceptance for exchange of which may, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any defect or irregularity in the tender of any
Preferred Stock, and the Company's interpretation of the terms and conditions of
the Exchange Offer (including the Instructions in the Letter of Transmittal)
will be final and binding. None of the Company, the Exchange Agent, the Dealer
Managers, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Tenders of Preferred Stock involving any irregularities will not be deemed
to have been made until such irregularities have been cured or waived. Preferred
Stock received by the Exchange Agent that is not validly tendered and as to
which the irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering Holder (or in the case of Preferred Stock
tendered by book-entry transfer into the Exchange Agent's account at DTC, such
Preferred Stock will be credited to an account maintained at DTC designated by
the participant therein who so delivered such Preferred Stock), unless otherwise
requested by the Holder in the Letter of Transmittal, as promptly as practicable
after the Expiration Date or the withdrawal or termination of the Exchange
Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Preferred Stock for exchange (the "Transferor")
exchanges, assigns and transfers the Preferred Stock to the Company and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Preferred Stock to be assigned,
transferred and exchanged. The Transferor specifically authorizes the Exchange
Agent to withdraw under the Deposit Agreement the Preferred Stock underlying any
tendered Depositary Shares, and to tender such underlying Preferred Stock in the
Exchange Offer. The Transferor represents and warrants that it has full power
and authority to tender, exchange, assign and transfer the Preferred Stock and
to acquire Debentures issuable upon the exchange of such tendered Preferred
Stock, and that, when the same are accepted for exchange, the Company will
acquire good and unencumbered title to the tendered Preferred Stock, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Company to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Preferred Stock or transfer ownership of such Preferred Stock on the
account books maintained by DTC. All authority conferred by the Transferor will
survive the death, bankruptcy or incapacity of the Transferor and every
obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.
WITHDRAWAL OF TENDERS
Tenders of Preferred Stock pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date and, unless accepted for exchange by
the Company, may be withdrawn at any time after 40 business days after the date
of this Prospectus.
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<PAGE> 20
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at the address set forth in the Letter of Transmittal. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered Preferred Stock to be withdrawn, (ii) if the Preferred Stock is
held in certificated form, the certificate numbers of the Preferred Stock to be
withdrawn, (iii) a statement that such Holder is withdrawing his election to
have such Preferred Stock exchanged, and the name of the registered Holder of
such Preferred Stock, and must be signed by the Holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Preferred Stock being withdrawn. The Exchange Agent will return the
properly withdrawn Preferred Stock promptly following receipt of notice of
withdrawal. If Preferred Stock has been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawn Preferred Stock and
otherwise comply with DTC's procedures. All questions as to the validity of
notice of withdrawal, including time of receipt, will be determined by the
Company, and such determination will be final and binding on all parties.
Withdrawals of tenders of Preferred Stock may not be rescinded and any Preferred
Stock withdrawn will thereafter be deemed not validly tendered for purposes of
the Exchange Offer. Properly withdrawn Preferred Stock, however, may be
retendered by following the procedures therefor described elsewhere herein at
any time prior to the Expiration Date. See "-- Procedures for Tendering."
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer.
The Exchange Agent:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
Tenders & Exchanges Tenders & Exchanges
Suite 4680 -- AMR P.O. Box 2565, Mail Suite 4660
14 Wall Street, 8th Floor Jersey City, NJ 07303-2565
New York, NY 10005
</TABLE>
By Facsimile:
(For Eligible Institutions Only)
(201) 222-4720 or (201) 222-4721
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
D.F. King & Co., Inc. has been retained by the Company as the Information
Agent to assist in connection with the Exchange Offer. Questions and requests
for assistance regarding the Exchange Offer, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery may be directed to the Information Agent at 77 Water Street,
New York, New York 10005, telephone (800) 347-7869.
The Company will pay the Exchange Agent and Information Agent reasonable
and customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith.
DEALER MANAGERS
Lehman Brothers and Goldman, Sachs & Co., as Dealer Managers, have agreed
to solicit exchanges of Preferred Stock for Debentures. The Company will pay
each Dealer Manager a fee that is dependent on the number of shares of Preferred
Stock accepted pursuant to the Exchange Offer. The maximum fee payable is
approximately $6,875,000. The Company will also reimburse the Dealer Managers
for certain reasonable out-
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<PAGE> 21
of-pocket expenses in connection with the Exchange Offer and will indemnify the
Dealer Managers against certain liabilities, including liabilities under the
Securities Act. Additional solicitation may be made by telecopier, telephone or
in person by officers and regular employees of the Company and its affiliates.
No additional compensation will be paid to any such officers and employees who
engage in soliciting tenders.
LISTING AND TRADING OF DEBENTURES AND PREFERRED STOCK; TRANSFER RESTRICTIONS
There has not previously been any public market for the Debentures. While
the Company intends to list the Debentures on the NYSE, there can be no
assurance that an active market for the Debentures will develop or be sustained
in the future on such exchange. Listing will depend upon the satisfaction of the
NYSE's listing requirements with respect to the Debentures, including
requirements as to the principal amount and distribution of the Debentures.
Although the Dealer Managers have indicated to the Company that they intend to
make a market in the Debentures as permitted by applicable laws and regulations,
they are not obligated to do so and may discontinue any such market-making at
any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Debentures.
The Depositary Shares, the Preferred Stock represented thereby and the
Common Stock issuable upon conversion of such Preferred Stock have not been and
will not be registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. The Depositary Shares, such
Preferred Stock and such Common Stock are subject to restrictions on their
transfer designed to ensure compliance with the requirements of the Securities
Act and, upon consummation of the Exchange Offer, will continue to be subject to
such existing restrictions upon transfer. Holders of Preferred Stock who do not
tender their Preferred Stock in the Exchange Offer or whose Preferred Stock is
not accepted for exchange will continue to hold such Preferred Stock and will be
entitled to all the rights and preferences, and will be subject to all of the
limitations applicable thereto. See "Description of Preferred Stock." Moreover,
to the extent that Preferred Stock is tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Preferred Stock could be adversely
affected.
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE PREFERRED STOCK
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Exchange Offer between
the Company or any of its directors or executive officers and any person with
respect to any securities of the Company, including the Debentures, the
Depositary Shares, the Preferred Stock and the Common Stock issuable upon
conversion thereof.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Preferred Stock will be borne by
the Company. For compensation to be paid to the Dealer Managers see "-- Dealer
Managers." The total cash expenditures to be incurred by the Company in
connection with the Exchange Offer, other than fees payable to the Dealer
Managers, but including the expenses of the Dealer Managers, printing,
accounting and legal fees, and the fees and expenses of the Exchange Agent, the
Information Agent and the Trustee under the Indenture, are estimated to be
approximately $ .
The Company will pay all transfer taxes, if any, applicable to the exchange
of Preferred Stock pursuant to the Exchange Offer. If, however, certificates
representing Debentures, or shares of Preferred Stock not tendered or accepted
for exchange, are to be delivered to, or are to be issued in the name of, any
person other than the registered Holder of the Preferred Stock tendered or if a
transfer tax is imposed for any reason other than the exchange of Preferred
Stock pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered Holder or any other persons) will be payable
by the tendering Holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering Holder.
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<PAGE> 22
DESCRIPTION OF DEBENTURES
GENERAL
The Debentures are to be issued under an Indenture (the "Indenture"), to be
dated as of November 1, 1994, between the Company and The First National Bank of
Chicago, as trustee (the "Trustee"). The following statements with respect to
the Debentures are summaries and are subject to the detailed provisions of the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
Indenture, a copy of the form of which has been filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Debentures and the
Indenture, including the definitions therein of certain terms capitalized and
not otherwise defined in this Prospectus. Wherever references are made to
particular provisions of the Indenture or terms defined therein, such provisions
or definitions are incorporated by reference as part of the statements made and
such statements are qualified in their entirety by such references.
The Debentures will be unsecured, subordinated obligations of the Company,
will be limited in aggregate principal amount to the aggregate principal amount
of Debentures issued in the Exchange Offer and will mature on November 1, 2024.
The Debentures will be issued only in fully registered form, without coupons, in
minimum denominations of $1,000 and any integral multiples of $1,000 in excess
thereof.
Debentures will be transferable or exchangeable at the agency of the
Company maintained for such purpose in The City of New York (which, unless
changed, shall be a corporate trust office or agency of the Trustee). Debentures
may be transferred or exchanged without service charge, other than any tax or
governmental charge imposed in connection therewith. (Section 3.5 of the
Indenture.)
INTEREST
The Debentures will mature on November 1, 2024 and will bear interest at an
annual rate of % from the Issue Date or from the most recent interest
payment date to which interest has been paid or duly provided for. In addition,
holders of the Debentures will be entitled to interest at a rate of 6.0% per
annum from November 1, 1994 through the Expiration Date, in lieu of dividends
accumulating after November 1, 1994 on their Preferred Stock accepted for
exchange, payable at the time of the first interest payment on the Debentures.
Interest will be payable quarterly in arrears on February 1, May 1, August 1 and
November 1 of each year commencing February 1, 1995, provided that so long as
the Company shall not be in default in the payment of interest on the
Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with NYSE rules at any time during the term of
the Debentures, to extend the interest payment period from time to time for a
period not exceeding 20 consecutive calendar quarters (each, an "Extension
Period"). Interest will continue to accrue on the Debentures during an Extension
Period and will compound quarterly, at the rate specified for the Debentures, to
the extent permitted by applicable law. See "-- Option to Extend Interest
Payment Period." Interest payable on any Debenture that is punctually paid or
duly provided for on any Interest Payment Date shall be paid to the person in
whose name such Debenture is registered at the close of business on the January
15, April 15, July 15 or October 15, respectively, preceding such Interest
Payment Date (each, a "Record Date"). Interest will be computed on the basis of
twelve 30-day months and a 360-day year and, for any period shorter than a full
calendar month, on the basis of the actual number of days elapsed in such
period. If any date on which interest is payable on the Debentures is not a
Business Day, the payment of interest due on such date may be made on the next
succeeding Business Day (and without any interest or other payment in respect of
such delay). A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York or in Fort Worth, Texas are
authorized or required by law to close. (Section 3.1 of the Indenture.)
Payments in respect of the Debentures will be made at the office or agency
of the Company maintained for that purpose in The City of New York (which,
unless changed, shall be a corporate trust office or agency of the Trustee).
However, at the option of the Company, payments on the Debentures may be made
(i) by checks mailed by the Trustee to the Holders entitled thereto at their
registered addresses or (ii) by wire
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<PAGE> 23
transfers to accounts maintained by the Holders entitled thereto as specified in
the Register, provided that, in either case, the payment of principal with
respect to any Debenture will be made only upon surrender of such Debenture to
the Trustee. Interest payable on any Debenture that is not punctually paid or
duly provided for on any Interest Payment Date will forthwith cease to be
payable to the person in whose name such Debenture is registered on the relevant
Record Date, and such defaulted interest will instead be payable to the person
in whose name such Debenture is registered on the special record date or other
specified date determined in accordance with the Indenture; provided, however,
that interest shall not be considered payable by the Company on any Interest
Payment Date falling within an Extension Period unless the Company has elected
to make a full or partial payment of interest accrued on the Debentures on such
Interest Payment Date. (Section 3.7 of the Indenture.)
In the event the Company fails at any time to make any payment of interest,
principal or premium on the Debentures when due (after giving effect to any
grace period for payment thereof as described in "-- Events of Default, Notice
and Certain Rights on Default") or the Company exercises its option to extend
the interest payment period for an Extension Period as described in "-- Option
to Extend Interest Payment Period", the Company will not, until all defaulted
interest on the Debentures and all interest accrued on the Debentures during an
Extension Period and all principal and premium, if any, then due and payable on
the Debentures shall have been paid in full and any Extension Period shall have
terminated, (i) declare, set aside or pay any dividend or distribution on any
capital stock of the Company, including the Preferred Stock and the Common
Stock, except for dividends or distributions in shares of its capital stock or
in rights to acquire shares of its capital stock, or (ii) repurchase, redeem or
otherwise acquire, or make any sinking fund payment for the purchase or
redemption of, any shares of its capital stock (except by conversion into or
exchange for shares of its capital stock and except for a redemption, purchase
or other acquisition of shares of its capital stock made for the purpose of an
employee incentive plan or benefit plan of the Company or any of its
subsidiaries); provided, however, that any moneys deposited in any sinking fund
with respect to any preferred stock of the Company in compliance with the
provisions of such sinking fund and not in violation of this provision may
thereafter be applied to the purchase or redemption of such preferred stock in
accordance with the terms of such sinking fund without regard to the
restrictions contained in this provision.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company shall not be in default in the payment of interest
on the Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with NYSE rules at any time during the term of
the Debentures, prior to an Interest Payment Date as provided below, to extend
the interest payment period from time to time to another Interest Payment Date
by one or more quarterly periods, not to exceed 20 consecutive calendar quarters
from the last Interest Payment Date to which interest was paid in full (each, an
"Extension Period"). No interest shall be due and payable during an Extension
Period, but on the Interest Payment Date occurring at the end of each Extension
Period the Company shall pay to the holders of record on the Record Date for
such Interest Payment Date (regardless of who the holders of record may have
been on other dates during the Extension Period) all accrued and unpaid interest
on the Debentures, together with interest thereon. Interest will continue to
accrue on the Debentures during an Extension Period and will compound quarterly,
at the rate specified for the Debentures, to the extent permitted by applicable
law. Prior to the termination of any Extension Period, the Company may pay all
or any portion of the interest accrued on the Debentures on any Interest Payment
Date to holders of record on the Record Date for such Interest Payment Date or
from time to time further extend the interest payment period, provided that any
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 calendar quarters. If the Company shall elect to pay
all of the interest accrued on the Debentures on an Interest Payment Date during
an Extension Period, such Extension Period shall automatically terminate on such
Interest Payment Date. Upon the termination of any Extension Period and the
payment of all amounts of interest then due, the Company may commence a new
Extension Period, subject to the above requirements. Consequently, there could
be multiple Extension Periods of varying lengths (up to six Extension Periods of
20 consecutive calendar quarters each or more numerous shorter Extension
Periods) throughout the term of the Debentures. The Company has no current
intention of exercising its right to defer an interest payment period. However,
should the Company determine to exercise such right in the future, or
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<PAGE> 24
should the Company thereafter extend an Extension Period or prepay interest
accrued during an Extension Period, the market price of the Debentures is likely
to be affected. As a result, it is possible that the market price of the
Debentures may be more volatile than it would have been in the absence of the
exercise of such rights on the part of the Company.
The Company shall cause the Trustee to give holders of the Debentures prior
notice, by public announcement given in accordance with NYSE rules and by mail
to all such holders of, (i) the Company's election to initiate an Extension
Period and the duration thereof, (ii) the Company's election to extend any
Extension Period beyond the Interest Payment Date on which such Extension Period
is then scheduled to terminate and the duration of such extension and (iii) the
Company's election to make a full or partial payment of interest accrued on the
Debentures on any Interest Payment Date during any Extension Period and the
amount of such payment. In no event shall such notice be given less than five
Business Days prior to the January 15, April 15, July 15 or October 15 next
preceding the applicable Interest Payment Date. (Section 3.1 of the Indenture.)
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the
Debentures will be subordinated to the extent set forth in the Indenture to the
prior payment in full of amounts then due on all Senior Indebtedness (as defined
below). No payments or distributions, whether in cash, securities or other
property (other than securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the same extent as the Debentures, to the payment of
all Senior Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment) on
account of principal of, premium, if any, or interest on the Debentures may be
made by the Company unless full payment of all amounts then due on Senior
Indebtedness has been made or provided for in money or money's worth. Upon any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (other than securities of the Company or
any other corporation provided for by a plan of reorganization or readjustment
the payment of which is subordinated, at least to the same extent as the
Debentures, to the payment of all Senior Indebtedness at the time outstanding
and to any securities issued in respect thereof under such plan of
reorganization or readjustment) to creditors upon any dissolution or winding up
or total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due upon all Senior Indebtedness shall first be paid in
full, or payment thereof provided for in money or money's worth, before the
holders of the Debentures or the Trustee shall be entitled to retain any assets
so paid or distributed (other than the securities described in the first
parenthetical of this sentence) in respect of the Debentures (for principal or
interest) or of the Indenture. (Article XI of the Indenture.)
The term "Senior Indebtedness" of the Company means each of the following,
unless the agreement, instrument or lease evidencing the same expressly provides
that it is not senior in right of payment to the Debentures: (1) any Payment
Obligation (as defined) of the Company in respect of any indebtedness, directly
or indirectly, created, incurred or assumed for borrowed money or in connection
with the acquisition of any business, property or asset (including securities),
other than any account payable or other indebtedness created, incurred or
assumed in the ordinary course of business in connection with the obtaining of
materials or services; (2) any Payment Obligation of the Company in respect of
any lease that would, in accordance with generally accepted accounting
principles, be required to be classified and accounted for as a capital lease;
(3) any Payment Obligation of the Company in respect of any interest rate
exchange agreement, currency exchange agreement or similar agreement that
provides for payment (whether or not contingent) over a period or term
(including any renewals or extensions) longer than one year from the execution
thereof; (4) any Payment Obligation of the Company in respect of any agreement
relating to the lease (including a sale and leaseback) of real or personal
property that provides for payment (whether or not contingent) over a period or
term (including any renewals or extensions) longer than one year from the
execution thereof; (5) any Payment Obligation of any Subsidiary (as defined in
the Indenture) or of others of the kind described in the preceding clauses (1)
through (4) assumed or guaranteed by the Company or for which the Company is
22
<PAGE> 25
otherwise responsible or liable; and (6) any amendment, renewal, extension or
refunding of any of the foregoing Payment Obligations. However, Senior
Indebtedness does not include the Company's obligations in respect of the 5 1/4%
Subordinated Debentures due 1998 issued by American and for which the Company
and American are jointly and severally liable. The Company's obligations in
respect of such 5 1/4% Subordinated Debentures are equal in rank to the
Company's obligations to pay principal of, premium, if any, and interest on the
Debentures. (Article II of the Indenture.)
The term "Payment Obligation", when used with respect to Senior
Indebtedness, means an obligation stated in an agreement, instrument or lease to
pay money (whether for principal, premium, interest, sinking fund, periodic
rent, stipulated value, termination value, liquidated damages or otherwise), but
excludes an obligation to pay money in respect of fees (including, without
limitation, availability, commitment and similar fees) of, or as payment or
reimbursement for expenses (including, without limitation, legal, accounting and
ordinary out-of-pocket expenses) incurred by or on behalf of, or as indemnity
for losses, damages, taxes or other indemnity claims of any kind owed to, any
holder of Senior Indebtedness or other party to such agreement, instrument or
lease.
By reason of the subordination described herein, in the event of the
distribution of assets upon insolvency, creditors of the Company who are not
holders of Senior Indebtedness or of the Debentures may recover less, ratably,
than holders of Senior Indebtedness, and may recover more, ratably, than holders
of the Debentures. Moreover, upon any distribution of the assets of the Company,
the holders of the Debentures are required to pay over their share of such
distribution to the holders of Senior Indebtedness to the extent necessary to
pay all holders of Senior Indebtedness in full.
On June 30, 1994 approximately $6.3 billion of Senior Indebtedness was
outstanding. The calculation of the amount of Senior Indebtedness assumes that
the Company is primarily obligated for the present value of future minimum lease
payments under operating leases guaranteed by the Company but does not include
other contingent obligations such as stipulated values or liquidated damages.
There is no restriction under the Indenture on the creation of additional
indebtedness, including Senior Indebtedness, by the Company, including
indebtedness owed by the Company to American and its other subsidiaries.
Because the Company is a holding company that conducts business through its
subsidiaries, the Debentures are effectively subordinated to all existing and
future obligations of the Company's subsidiaries, including American. Any right
of the Company to participate in any distribution of the assets of any of the
Company's subsidiaries, including American, upon the liquidation, reorganization
or insolvency of such subsidiary (and the consequent right of the holders of the
Debentures to participate in those assets) will be subject to the claims of the
creditors (including trade creditors) and preferred stockholders of such
subsidiary, except to the extent that claims of the Company itself as a creditor
of such subsidiary may be recognized, in which case the claims of the Company
would still be subordinate to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Company. On June 30, 1994, approximately $ billion of indebtedness, leases
and other obligations (including trade payables) of the Company's subsidiaries
not included in the definition of Senior Indebtedness was outstanding.
Because the Company is a holding company, the Company's cash flow and
consequent ability to meet its debt obligations are primarily dependent upon the
earnings of its subsidiaries, particularly American, and on dividends and other
payments therefrom. The Company's subsidiaries are not obligated or required to
pay any amounts due pursuant to the Debentures or to make funds available
therefor in the form of dividends or advances to the Company. In addition,
certain debt and credit facility agreements of American contain certain
restrictive covenants, including a cash flow coverage test, a minimum net worth
requirement and limitations on indebtedness and the declaration of dividends on
shares of its capital stock, that could affect the Company's ability to pay
principal of, premium, if any, and interest on the Debentures. At June 30, 1994,
under the provisions of the most restrictive of those debt and credit facility
agreements, approximately $859 million of the retained earnings of American were
available for payment of cash dividends to the Company.
CONVERSION
Outstanding Debentures will be convertible at the option of the holder
thereof at any time after the date of original issuance thereof, unless
previously redeemed, into whole shares of Common Stock at a conversion price of
$79.00 per share of Common Stock (equivalent to 12.658 shares of Common Stock
per $1,000
23
<PAGE> 26
principal amount of Debentures converted), subject to adjustment as described
below. (Sections 12.1 and 12.4 of the Indenture.) No fractional shares of Common
Stock shall be issued upon conversion of Debentures. Instead of any fractional
share of Common Stock that would otherwise be issuable upon conversion of any
Debenture, the Company shall pay a cash adjustment in respect of such fraction
in an amount equal to the same fraction of the market price per share of Common
Stock (as determined or prescribed by the Board of Directors or a duly
authorized committee thereof, whose determination shall be conclusive, but
which, so long as the Common Stock is listed on the NYSE, shall be the Closing
Price reported on the NYSE) at the close of business on the Trading Day (as
defined in the Indenture) immediately preceding the Date of Conversion. (Section
12.3 of the Indenture.) Holders that convert their Debentures will not be
entitled to payment of any accrued interest on such Debentures, including
interest that accrues during an Extension Period. Debentures surrendered for
conversion during the period beginning on any Record Date and prior to the
corresponding Interest Payment Date must be accompanied by payment of an amount
equal to the interest payable on such Debentures on such Interest Payment Date.
(Section 12.2 of the Indenture.) Debentures called for redemption will not be
convertible after the close of business on the Business Day preceding the date
fixed for redemption, unless the Company defaults in payment of the Redemption
Price. (Section 12.1 of the Indenture.)
The initial conversion price of $79.00 per share of Common Stock is subject
to adjustment (under formulae set forth in the Indenture) in certain events,
including: (i) the issuance of Common Stock as a dividend or distribution on
Common Stock of the Company; (ii) certain subdivisions and combinations of the
Common Stock; (iii) the issuance to all holders of Common Stock of certain
rights or warrants to purchase Common Stock; (iv) the distribution to all
holders of Common Stock of shares of capital stock of the Company (other than
Common Stock) or evidences of indebtedness of the Company or assets (including
securities, but excluding those rights, warrants, dividends and distributions
referred to above and dividends and distributions in connection with the
liquidation, dissolution or winding up of the Company or paid in cash); (v)
distributions consisting of cash, excluding any quarterly cash dividend on the
Common Stock to the extent that the aggregate cash dividend per share of Common
Stock in any fiscal quarter does not exceed the greater of (x) the amount per
share of Common Stock of the next preceding quarterly cash dividend on the
Common Stock to the extent that such preceding quarterly dividend did not
require an adjustment of the Conversion Price pursuant to this clause (v) (as
adjusted to reflect subdivisions or combinations of the Common Stock) and (y)
3.75 percent of the average of the daily Closing Prices (as defined in the
Indenture) per share of Common Stock for the ten consecutive Trading Days
(determined as provided in the Indenture) immediately prior to the date of
declaration of such dividend, and excluding any dividend or distribution in
connection with the liquidation, dissolution or winding up of the Company; and
(vi) payment in respect of a tender or exchange offer by the Company or any
subsidiary of the Company for the Common Stock to the extent that the cash and
value of any other consideration included in such payment per share of Common
Stock exceeds the Current Market Price of the Common Stock on the Trading Day
next succeeding the date on which the Company becomes irrevocably obligated to
make such payment. If any adjustment is required to be made as set forth in
clause (v) above as a result of a distribution which is a quarterly dividend,
such adjustment would be based upon the amount by which such distribution
exceeds the amount of the quarterly cash dividend permitted to be excluded
pursuant to such clause (v). If an adjustment is required to be made as set
forth in clause (v) above as a result of a distribution which is not a quarterly
dividend, such adjustment would be based upon the full amount of such
distribution.
In the event that the rights issued pursuant to the Rights Agreement (as
defined below) are separately distributed to holders of Common Stock upon the
occurrence of certain events specified in the Rights Agreement or otherwise such
that holders of Debentures would thereafter not be entitled to receive any such
rights in respect of the Common Stock issuable upon conversion of such
Debentures, the conversion price of the Debentures will be adjusted in
accordance with the provisions of the Indenture governing clause (iv) of the
preceding paragraph. In addition, in lieu of making any adjustment to the
conversion price of the Debentures, the Company has the option to amend the
Rights Agreement to provide that the rights shall be issuable upon conversion of
the Debentures without regard to whether the shares of Common Stock issuable
upon conversion of the Debentures were issued before or after the Distribution
Date (as defined in the Rights Agreement).
24
<PAGE> 27
The Company from time to time may to the extent permitted by law reduce the
conversion price by any amount for any period of at least 20 days, in which case
the Company shall give at least 15 days' notice of such reduction, if the Board
of Directors has made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive. The Company
may, at its option, make such reductions in the conversion price, in addition to
those set forth above, as the Board of Directors deems advisable to avoid or
diminish any income tax to holders of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes. (Section 12.5 of the Indenture.) See "Certain
Federal Income Tax Considerations -- Adjustment of Conversion Price."
If any transaction shall occur (including without limitation (i) any
recapitalization or reclassification of the Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination of the Common Stock), (ii) any
consolidation or merger of the Company with or into any other person or any
merger of another person into the Company (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Common
Stock), (iii) any sale or transfer of all or substantially all of the assets of
the Company, or (iv) any compulsory share exchange) pursuant to which either
shares of Common Stock shall be converted into the right to receive other
securities, cash or other property, or, in the case of a sale or transfer of all
or substantially all of the assets of the Company, the holders of Common Stock
shall be entitled to receive other securities, cash or other property, then
appropriate provision shall be made so that the holder of any Debenture then
outstanding shall have the right thereafter to convert such Debenture only into
(x) in the case of any such transaction that does not constitute a Common Stock
Fundamental Change (as defined below) and subject to funds being legally
available for such purpose under applicable law at the time of such conversion,
the kind and amount of the securities, cash or other property that would have
been receivable upon such transaction by a holder of the number of shares of
Common Stock issuable upon conversion of such Debenture immediately prior to
such transaction, after giving effect, in the case of any Non-Stock Fundamental
Change (as defined below), to any adjustment in the conversion price in
accordance with clause (1) of the following paragraph, and (y) in the case of
any such transaction that constitutes a Common Stock Fundamental Change, common
stock of the kind received by holders of Common Stock as a result of such Common
Stock Fundamental Change in an amount determined in accordance with clause (2)
of the following paragraph. The company or the person formed by such
consolidation or resulting from such merger or that acquires such assets or that
acquires the Company's shares, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituent document to
establish such right. Such certificate or articles of incorporation or other
constituent document shall provide for adjustments that, for events subsequent
to the effective date of such certificate or articles of incorporation or other
constituent documents, shall be as nearly equivalent as may be practicable to
the relevant adjustments provided for in the preceding paragraphs and in this
paragraph. (Section 12.6 of the Indenture.)
Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as follows:
(1) in the case of a Non-Stock Fundamental Change, the conversion
price of the Debentures immediately following such Non-Stock Fundamental
Change shall be the lower of (A) the conversion price in effect immediately
prior to such Non-Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to the preceding paragraphs, and
(B) the product of (1) the greater of the Applicable Price (as defined
below) and the then applicable Reference Market Price (as defined below)
and (2) a fraction, the numerator of which is $1,000 and the denominator of
which is the sum of (x) the amount of the redemption price for $1,000
principal amount of Debentures if the redemption date were the date of such
Non-Stock Fundamental Change (or, for the period commencing on the Issue
Date and ending on January 31, 1995 and the twelve-month period commencing
on February 1, 1995, the product of 105.4% and 104.8%, respectively, times
$1,000) plus (y) an amount equal to any then-accrued and unpaid interest on
such Debenture; and
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<PAGE> 28
(2) in the case of a Common Stock Fundamental Change, the conversion
price of the Debentures immediately following such Common Stock Fundamental
Change shall be the conversion price in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, multiplied by a
fraction, the numerator of which is the Purchaser Stock Price (as defined
below) and the denominator of which is the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental Change in which
(A) 100% of the value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror, or other third party (and
cash, if any, paid with respect to any fractional interests in such common
stock resulting from such Common Stock Fundamental Change) and (B) all of
the Common Stock of the Company shall have been exchanged for, converted
into, or acquired for, common stock of the successor, acquiror or other
third party (and any cash paid with respect to fractional interests), the
conversion price of the Debentures immediately following such Common Stock
Fundamental Change shall be the conversion price in effect immediately
prior to such Common Stock Fundamental Change multiplied by a fraction, the
numerator of which is one (1) and the denominator of which is the number of
shares of common stock of the successor, acquiror, or other third party
received by a holder of one share of Common Stock as a result of such
Common Stock Fundamental Change. (Section 12.10 of the Indenture.)
Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a Holder may receive significantly
different consideration upon conversion. In the event of a Non-Stock Fundamental
Change, the Holder has the right to convert Debentures into the kind and amount
of the shares of stock and other securities or property or assets (including
cash), except as otherwise provided above, as is determined by the number of
shares of Common Stock receivable upon conversion at the conversion price as
adjusted in accordance with clause (1) of the preceding paragraph. However, in
the event of a Common Stock Fundamental Change in which less than 100% of the
value of the consideration received by a holder of Common Stock is common stock
of the successor, acquiror or other third party, a holder of Debentures who
converts such Debentures following the Common Stock Fundamental Change will
receive consideration in the form of such common stock only, whereas a holder
who converted such Debentures prior to the Common Stock Fundamental Change would
have received consideration in the form of such common stock as well as any
other securities or assets (which may include cash) issuable upon conversion of
such Debentures immediately prior to such Common Stock Fundamental Change.
The term "Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the daily Closing Prices per share of Common
Stock for the 10 consecutive Trading Days (determined as provided in the
Indenture) immediately prior to the record date for the determination of the
holders of Common Stock entitled to receive cash, securities, property or other
assets in connection with such Non-Stock Fundamental Change or Common Stock
Fundamental Change or, if there is no such record date, prior to the date upon
which the holders of the Common Stock shall have the right to receive such cash,
securities, property or other assets.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors, which determination shall be conclusive) of the consideration
received by holders of Common Stock pursuant to such transaction consists of
common stock that, for the 10 Trading Days immediately prior to such Fundamental
Change, has been admitted for listing or admitted for listing subject to notice
of issuance on a national securities exchange or quoted on the Nasdaq National
Market; provided, however, that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding Debentures continue to
exist as outstanding Debentures, or (ii) not later than the occurrence of such
Fundamental Change, a corporation succeeding to the business of the Company
complies with the provisions described under the heading "-- Consolidation,
Merger or Sale by the Company".
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<PAGE> 29
The term "Fundamental Change" means the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Common Stock shall be exchanged for, converted into, acquired for or
shall constitute solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of any such series of transactions or
events, for purposes of adjustment of the conversion price, such Fundamental
Change shall be deemed to have occurred when substantially all of the Common
Stock of the Company shall have been exchanged for, converted into, or acquired
for, or shall constitute solely the right to receive such cash, securities,
property or other assets, but the adjustment shall be based upon the
consideration that the holders of Common Stock received in the transaction or
event as a result of which more than 50% of the Common Stock of the Company
shall have been exchanged for, converted into, or acquired for, or shall
constitute solely the right to receive, such cash, securities, property or other
assets; and provided, further, that such term does not include (i) any such
transaction or event in which the Company and/or any of its subsidiaries are the
issuers of all the cash, securities, property or other assets exchanged,
acquired or otherwise issued in such transaction or event, or (ii) any such
transaction or event in which the holders of Common Stock receive securities of
an issuer other than the Company or any of its subsidiaries if, immediately
following such transaction or event, such holders hold a majority of the
securities having the power to vote normally in the election of directors of
such other issuer outstanding immediately following such transaction or other
event.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the closing prices for one share of the
common stock received by holders of Common Stock in such Common Stock
Fundamental Change during the 10 consecutive Trading Days immediately prior to
the date fixed for the determination of the holders of Common Stock entitled to
receive such common stock or, if there is no such date, prior to the date upon
which the holders of Common Stock shall have the right to receive such common
stock.
The term "Reference Market Price" shall initially mean $42.3333 and, in the
event of any adjustment to the conversion price other than as a result of a
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of $79.00 per
share. (Section 12.1 of the Indenture)
No adjustment to the conversion price will be required to be made in any
case until cumulative adjustments require an increase or decrease of at least 1%
of the conversion price. (Section 12.5 of the Indenture.)
REDEMPTION
The Debentures will not be subject to any mandatory redemption, sinking
fund or other obligation of the Company to amortize, redeem or retire the
Debentures, and will not be redeemable prior to February 1, 1996. On and after
such date, the Debentures are redeemable at the option of the Company upon
notice at any time, in whole or in part, at the following percentages of the
principal amount thereof redeemed, plus accrued and unpaid interest, if any, up
to but excluding the redemption date, if redeemed during the twelve-month period
commencing February 1 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---------------------------- ----------
<S> <C>
1996........................ 104.2%
1997........................ 103.6%
1998........................ 103.0%
1999........................ 102.4%
2000........................ 101.8%
2001........................ 101.2%
2002........................ 100.6%
2003 and thereafter......... 100.0%
</TABLE>
If fewer than all the outstanding Debentures are to be redeemed, the Company
will select those Debentures to be redeemed by lot or pro rata or in such other
manner permitted by the rules of the NYSE as the Board of Directors may
determine.
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<PAGE> 30
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Debentures to be
redeemed at the address shown on the stock transfer books. After the redemption
date, interest will cease to accrue on the Debentures called for redemption and
all rights of the holders of such Debentures will terminate, except the right to
receive the redemption price without interest. (Section 10.5 of the Indenture.)
VOTING RIGHTS
The holders of the Debentures will have no voting rights.
CONSOLIDATION, MERGER OR SALE BY THE COMPANY
The Indenture provides that the Company may merge or consolidate with or
into any other corporation or sell, convey, transfer or otherwise dispose of all
or substantially all of its assets to any person, firm or corporation, if (i)
(a) in the case of a merger or consolidation, the Company is the surviving
corporation or (b) in the case of a merger or consolidation where the Company is
not the surviving corporation and in the case of a sale, conveyance, transfer or
other disposition, the successor corporation is a corporation organized and
existing under the laws of the United States of America or a State thereof and
such corporation expressly assumes by supplemental indenture all the obligations
of the Company under the Debentures and under the Indenture, (ii) immediately
after giving effect to such merger or consolidation, or such sale, conveyance,
transfer or other disposition, no Default or Event of Default (as defined below)
shall have occurred and be continuing and (iii) certain other conditions are
met. In the event a successor corporation assumes the obligations of the
Company, such successor corporation shall succeed to and be substituted for the
Company under the Indenture and under the Debentures and all obligations of the
Company thereunder shall terminate. (Section 7.1 of the Indenture.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, either the Trustee or the holders of 25% in
aggregate principal amount of the Debentures then outstanding may, by written
notice to the Company (and to the Trustee, if notice is given by such holders of
Debentures), declare the principal of all the Debentures to be due and payable.
However, at any time after a declaration of acceleration with respect to the
Debentures has been made, but before a judgment or decree based on such
acceleration has been obtained, the holders of a majority in aggregate principal
amount of the Debentures then outstanding may, under certain circumstances,
rescind and annul such acceleration. (Section 5.2 of the Indenture.)
Events of Default are defined in the Indenture as being: default for thirty
days in payment of any interest installment when due; default for ten days in
payment of principal or premium, if any, at maturity or on redemption or
otherwise, on the Debentures when due; default for sixty days after notice to
the Company by the Trustee, or to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the Debentures then outstanding,
in the performance of any other covenant in the Indenture; default resulting in
acceleration of other indebtedness of the Company for borrowed money where the
aggregate principal amount so accelerated exceeds $150 million and such
acceleration is not rescinded or annulled within ten days after the written
notice thereof to the Company by the Trustee or to the Company and the Trustee
by the holders of at least 25% in aggregate principal amount of the Debentures
then outstanding, provided that such Event of Default will be cured or waived if
the default that resulted in the acceleration of such other indebtedness is
cured or waived; and certain events of bankruptcy, insolvency or reorganization
of the Company. (Section 5.1 of the Indenture.)
The Indenture provides that the Trustee shall, within ninety days after the
occurrence of a Default with respect to the Debentures, give to the holders of
the Debentures notice of all uncured Defaults known to it; provided that, except
in the case of default in payment on the Debentures the Trustee may withhold the
notice if and so long as a Responsible Officer (as defined in the Indenture) in
good faith determines that withholding
28
<PAGE> 31
such notice is in the interests of the holders. (Section 6.5 of the Indenture.)
"Default" means any event which is, or after notice or passage of time or both,
would be, an Event of Default. (Section 1.1 of the Indenture.)
The Indenture provides that the holders of a majority in aggregate
principal amount of the Debentures then outstanding may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, provided that such
direction shall not be in conflict with any law or the Indenture and subject to
certain other limitations. (Section 5.8 of the Indenture.) The right of any
holder of Debentures to institute action for any remedy under the Indenture
(except the right to enforce payment of the principal of, interest on, and
premium, if any, on its Debentures when due) is subject to certain conditions
precedent, including a request to the Trustee by the holders of not less than
25% in aggregate principal amount of Debentures then outstanding to take action,
and an offer to the Trustee of satisfactory indemnification against liabilities
incurred by it in so doing. (Section 5.9 of the Indenture.)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate as to the Company's compliance with all conditions and
covenants of the Indenture. (Section 9.6 of the Indenture.)
The holders of a majority in aggregate principal amount of the Debentures
then outstanding by notice to the Trustee may waive, on behalf of the holders of
all the Debentures, any past Default or Event of Default and its consequences
except, a Default or Event of Default in the payment of the principal of,
premium, if any, or interest on any of the Debentures and certain other
defaults. (Section 5.7 of the Indenture.)
If a bankruptcy proceeding is commenced in respect of the Company under the
Federal Bankruptcy Code or if the principal amount of the Debentures is
accelerated upon the occurrence of an event of default, the holders of the
Debentures may be unable to recover amounts representing the unamortized portion
of any original issue discount at the time such proceeding is commenced or such
acceleration occurs.
AGREED TAX TREATMENT
The Indenture provides that the each holder of a Debenture, each person
that acquires a beneficial ownership interest in a Debenture and the Company
agree that for United States federal, state and local tax purposes it is
intended that such Debenture constitute indebtedness. (Section 3.1 of the
Indenture.)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Debentures in order (i) to evidence the succession of
another corporation to the Company and the assumption of the covenants and
obligations of the Company by such successor to the Company; (ii) to add to the
covenants of the Company for the benefit of the holders of the Debentures or
surrender any right or power of the Company; (iii) to add additional Events of
Default; (iv) to secure the Debentures; (v) to evidence and provide for
successor Trustees; (vi) to provide for uncertificated Debentures so long as
such uncertificated Debentures are in registered form for United States federal
income tax purposes; (vii) to correct or supplement any provision of the
Indenture which may be inconsistent with any other provision therein or to make
any other provisions with respect to matters or questions arising under the
Indenture, provided that such action shall not adversely affect the interests of
the holders of the Debentures; (viii) to cure any ambiguity or correct any
mistake; or (ix) to comply with any requirement of the Commission in connection
with the qualification of the Indenture under the Trust Indenture Act. (Section
8.1 of the Indenture.)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Debentures then outstanding, to execute supplemental indentures
adding any provisions to or changing or eliminating any of the provisions of the
Indenture or any supplemental indenture or modifying the rights of the holders,
except that no such supplemental indenture may, without the consent of each
holder, (i) change the time for payment of principal, premium, if any, or
interest on any Debenture; (ii) reduce the principal of, or interest on any
Debenture; (iii) reduce the amount of premium, if any, payable upon the
redemption of any Debenture; (iv) impair the
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right to institute suit for the enforcement of any payment on or with respect to
any Debenture; (v) reduce the percentage in principal amount of the outstanding
Debentures the consent of whose holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain default; (vi) adversely affect the
right to convert Debentures; (vii) modify any of the provisions relating to the
subordination of the Debentures in a manner adverse to the holders of the
Debentures; (viii) change the obligation of the Company to maintain an office or
agency in the places and for the purposes specified in the Indenture; or (ix)
modify the provisions relating to waiver of certain defaults or any of the
foregoing provisions. (Section 8.2 of the Indenture.)
THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture.
First Chicago Trust Company of New York, an affiliate of the Trustee, will act
as Exchange Agent for the Exchange Offer, and currently serves as Depositary
under the Deposit Agreement for the Depositary Shares, as Transfer Agent and
Registrar for the Preferred Stock and the Common Stock, and as Rights Agent
under the Rights Agreement (as defined below).
FORM OF DEBENTURES
The Debentures will be issued in fully registered form, without coupons.
Investors may elect to hold their Debentures directly or, subject to the rules
and procedures of DTC described below, hold interests in a global Debenture (the
"Global Debenture") registered in the name of DTC or its nominee.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System, a "clearing corporation" within the meaning of the
New York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of section 17A of the Exchange Act. DTC was created to hold
securities of its participants (the "Participants") and to facilitate the
clearance and settlement of securities transactions among its Participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own DTC. Access to DTC's book-entry system
is also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly.
Upon the issuance of a Global Debenture, DTC will credit on its book-entry
registration and transfer system, the principal amount of the Debentures
represented by such Global Debenture to the accounts of institutions that have
accounts with DTC. The accounts to be credited shall be designated by the
holders that sold such Debentures to such Participants. Ownership of beneficial
interests in a Global Debenture will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in a
Global Debenture will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC for such Global Debenture and
on the records of Participants (with respect to the interests of persons holding
through Participants). So long as DTC, or its nominee, is the owner of a Global
Debenture, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Debentures represented by such Global Debenture for all
purposes under the Indenture.
Each person owning a beneficial interest in a Global Debenture must rely on
the procedures of DTC and, if such person is not a Participant, on the
procedures of the Participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, if it requests any action of holders or
if an owner of a beneficial interest in a Global Debenture desires to give or
take any action which a holder is entitled to give or take under the Indenture,
DTC would authorize the Participants holding the relevant beneficial interests
to give or take such action, and such Participants would authorize beneficial
owners owning through such Participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.
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The Company expects that DTC, upon receipt of any payment of principal or
interest in respect of a Global Debenture, will credit immediately Participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the Debentures represented by the Global Debenture as shown on the
records of DTC. The Company also expects that payments by Participants to owners
of beneficial interests in such Global Debenture held through such Participants
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
Participants. Accordingly, although owners who hold Debentures through
Participants will not possess Debentures in definitive form, the Participants
will provide a mechanism by which holders of Debentures will receive payments
and will be able to transfer their interests.
Principal and interest payments on Debentures represented by a Global
Debenture registered in the name of DTC or its nominee will be made to DTC or
its nominee, as the case may be, as the registered owner of such Global
Debenture. None of the Company, the Trustee or any other agent of the Company
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interest in such Global
Debenture or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
If DTC or a successor depository is at any time unwilling or unable to
continue as depository of the Global Debentures and a successor depository is
not appointed by the Company within ninety days, the Company will issue
Certificated Debentures in exchange for the Global Debentures. In addition, the
Company may at any time determine not to have Debentures represented by a Global
Debenture and, in such event, will issue Certificated Debentures in exchange for
the Global Debentures. In either case, an owner of a beneficial interest in a
Global Debenture will be entitled to have Certificated Debentures equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Certificated Debentures.
SAME-DAY SETTLEMENT IN RESPECT OF GLOBAL DEBENTURES
So long as any Debentures are represented by Global Debentures registered
in the name of DTC or its nominee, such Debentures will trade in DTC's Same-Day
Funds Settlement System, and secondary market trading activity in such
Debentures will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Debentures.
DESCRIPTION OF COMMON STOCK
The following statements with respect to the capital stock of the Company
are summaries and are subject to the detailed provisions of the Company's
certificate of incorporation, as amended (the "Certificate of Incorporation"),
and by-laws, as amended (the "By-Laws"). These statements do not purport to be
complete, or to give full effect to the provisions of statutory or common law,
and are subject to, and are qualified in their entirety by reference to, the
terms of the Certificate of Incorporation and the By-Laws, copies of which are
filed as exhibits to the Registration Statement and are incorporated by
reference into this Prospectus.
The Certificate of Incorporation authorizes the issuance of 150,000,000
shares of Common Stock. On July 29, 1994, 75,858,777 shares of Common Stock were
outstanding. The Certificate of Incorporation provides that the Company's Board
of Directors (the "Board of Directors") is authorized to provide for the
issuance of shares of preferred stock, from time to time, in one or more series,
and to fix any voting powers, full or limited, and the designations, preferences
and relative, participating, optional or other special rights, applicable to the
shares to be included in any such series and any qualifications, limitations or
restrictions thereon. No shares of preferred stock of the Company (other than
the Preferred Stock) are outstanding as of the date hereof. However, 1,000,000
shares of Series A Junior Participating Preferred Stock of the Company (the
"Junior Preferred Stock") have been authorized and reserved for issuance in
connection with the preferred stock purchase rights (the "Rights") described
below in "Description of Rights and Junior Preferred Stock."
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VOTING RIGHTS
Each holder of Common Stock is entitled to one vote for each share
registered in his name on the books of the Company on all matters submitted to a
vote of shareholders. Except as otherwise provided by law, the holders of Common
Stock vote as one class. The shares of Common Stock do not have cumulative
voting rights. As a result, subject to the voting rights, if any, of the holders
of any shares of the Company's preferred stock which may at the time be
outstanding, including the Preferred Stock, the holders of Common Stock entitled
to exercise more than 50% of the voting rights in an election of directors can
elect 100% of the directors to be elected if they choose to do so. In such
event, the holders of the remaining Common Stock voting for the election of
directors will not be able to elect any persons to the Board of Directors.
DIVIDEND RIGHTS
Subject to the rights of the holders of any shares of the Company's
preferred stock which may at the time be outstanding, including the Preferred
Stock, holders of Common Stock are entitled to such dividends as the Board of
Directors may declare out of funds legally available therefor. For a description
of contractual provisions and other factors that limit or affect the ability or
contractual right of the Company to pay dividends, see "Description of Preferred
Stock -- Dividends."
With the exception of the dividend of the Rights, no dividends have been
paid on the Common Stock, and, prior to October 1, 1982 (the date as of which
the Company became the parent of American), no dividends had been paid on the
common stock of American after the first quarter of 1980.
DELAWARE GENERAL CORPORATION LAW SECTION 203
As a corporation organized under the laws of the State of Delaware, the
Company is subject to Section 203 of the DGCL which restricts certain business
combinations between the Company and an "interested stockholder" (in general, a
stockholder owning 15% or more of the Company's outstanding voting stock) or its
affiliates or associates for a period of three years following the date on which
the stockholder becomes an "interested stockholder". The restrictions do not
apply if (i) prior to an interested stockholder becoming such, the Board of
Directors approves either the business combination or the transaction in which
the stockholder becomes an interested stockholder, (ii) upon consummation of the
transaction in which any person becomes an interested stockholder, such
interested stockholder owns at least 85% of the voting stock of the Company
outstanding at the time the transaction commences (excluding shares owned by
certain employee stock ownership plans and persons who are both directors and
officers of the Company) or (iii) on or subsequent to the date an interested
stockholder becomes such, the business combination is both approved by the Board
of Directors and authorized at an annual or special meeting of the Company's
shareholders, not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock not owned by the interested stockholder.
LIQUIDATION RIGHTS AND OTHER PROVISIONS
Subject to the prior rights of creditors and the holders of any preferred
stock which may be outstanding from time to time, including the Preferred Stock,
the holders of the Common Stock are entitled in the event of liquidation,
dissolution or winding up to share pro rata in the distribution of all remaining
assets.
The Common Stock is not liable to any calls or assessments and is not
convertible into any other securities. The Certificate of Incorporation provides
that the private property of the stockholders shall not be subject to the
payment of corporate debts. There are no redemption or sinking fund provisions
applicable to the Common Stock, and the Certificate of Incorporation provides
that there shall be no preemptive rights.
The Certificate of Incorporation provides that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the directors's duty of loyalty to the Company or its
shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL or (iv) for any transaction from which the director derived an improper
personal
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benefit. Section 174 of the DGCL specifies conditions under which directors of
Delaware corporations may be liable for unlawful dividends or unlawful stock
purchases or redemptions.
The Transfer Agent and Registrar for the Common Stock is First Chicago
Trust Company of New York.
DESCRIPTION OF RIGHTS AND JUNIOR PREFERRED STOCK
RIGHTS
On February 13, 1986, the Board of Directors declared a dividend of one
Right for each outstanding share of Common Stock to stockholders of record on
February 24, 1986. Each share of Common Stock issued thereafter and before the
Distribution Date (as defined below) or earlier redemption, exchange or
expiration of the Rights pursuant to the Rights Agreement, dated as of February
13, 1986, as amended (the "Rights Agreement"), between the Company and First
Chicago Trust Company of New York (as successor Rights Agent to J. Henry
Schroder Bank and Trust Company), will also be accompanied by one Right. The
following statements with respect to the Rights are summaries and are subject to
the detailed provisions of the Rights Agreement, which is filed as an exhibit to
the Registration Statement. This summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the provisions of
the Rights Agreement, which are incorporated by reference into this Prospectus.
Following the Distribution Date and except as described below, each Right
entitles the registered holder thereof to purchase from the Company one
one-hundredth of a share of Junior Preferred Stock at a price (the "Purchase
Price") of $200 per one one-hundredth of a share of Junior Preferred Stock,
subject to adjustment. See "-- Junior Preferred Stock". The Rights are not
exercisable until the Distribution Date. The Rights will expire on February 29,
1996, unless exercised in connection with a transaction of the type described
below or unless earlier redeemed or exchanged by the Company.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Initially, ownership of the Rights will be evidenced by the Common Stock
certificates representing shares then outstanding, and no separate certificates
representing the Rights (the "Rights Certificates") will be distributed. Until
the Distribution Date (or earlier redemption, exchange or expiration of the
Rights), the Rights will be transferable only with the Common Stock, and the
surrender for transfer of any certificate for Common Stock will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) 10 days following a public announcement
that a person or group of affiliates or associated persons (other than the
Company, its subsidiaries or employee benefit plans thereof) (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership of
10% or more of the outstanding Common Stock or (ii) 10 days following the
commencement of or announcement of an intention to make a tender offer or
exchange offer, the consummation of which would result in the Acquiring Person
becoming the beneficial owner of 30% or more of such outstanding Common Stock
(such date being called the Distribution Date). As soon as practicable following
the Distribution Date, Rights Certificates will be mailed to holders of record
of Common Stock as of the close of business on the Distribution Date. After such
time, such separate Rights Certificates alone will evidence the Rights and could
trade independently from the Common Stock.
In the event that any person or group of affiliated or associated persons
becomes the beneficial owner of 10% or more of the outstanding Common Stock,
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter be void), will thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price of the
Right and in lieu of Junior Preferred Stock, that number of shares of Common
Stock having a market value at the time of the 10% acquisition of two times the
then current Purchase Price.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power is acquired, proper provision will be made so that each holder of a Right
shall thereafter have the right to receive, upon the exercise thereof at the
then current
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Purchase Price of the Right and in lieu of Junior Preferred Stock, that number
of shares of common stock of the acquiring company which at the time of such
transaction would have a market value of two times the then current Purchase
Price.
At any time after any person or group has become an Acquiring Person but
before any person or group becomes the beneficial owner of 50% or more of the
outstanding Common Stock, the Board of Directors may exchange each Right (other
than Rights beneficially owned by the Acquiring Person) for one share of Common
Stock (or one one-hundredth of a share of Junior Preferred Stock), subject to
adjustment.
At any time prior to the time that an Acquiring Person acquires beneficial
ownership of 10% or more of the outstanding Common Stock, the Board of Directors
may redeem the Rights in whole, but not in part, at a price of $.05 per Right
(the "Redemption Price"). Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Purchase Price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment upon the occurrence of certain events with respect to the
Company, including stock dividends, sub-divisions, combinations,
reclassifications, rights or warrants offerings of Junior Preferred Stock at
less than the then current market price and certain distributions of property or
evidences of indebtedness of the Company to holders of Junior Preferred Stock,
all as set forth in the Rights Agreement.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors since the Rights may be redeemed by the Company at $.05 per
Right prior to the time that a person or group has acquired beneficial ownership
of 10% or more of the Common Stock.
JUNIOR PREFERRED STOCK
In connection with the Rights Agreement, 1,000,000 shares of Junior
Preferred Stock have been authorized and reserved for issuance by the Board of
Directors. No shares of Junior Preferred Stock are outstanding as of the date
hereof. The following statements with respect to the Junior Preferred Stock are
summaries and are subject to the detailed provisions of the Certificate of
Incorporation and the certificate of designation relating to the Junior
Preferred Stock, which is filed as an exhibit to the Registration Statement (the
"Junior Preferred Stock Certificate of Designation"). These statements do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, the terms of the Certificate of Incorporation and the Junior
Preferred Stock Certificate of Designation, which are incorporated by reference
in this Prospectus.
Subject to the prior payment of cumulative dividends on any class of
preferred stock ranking senior to the Junior Preferred Stock, a holder of Junior
Preferred Stock will be entitled to cumulative dividends out of funds legally
available therefor, when, as and if declared by the Board of Directors, at a
quarterly rate per share of Junior Preferred Stock equal to the greater of (a)
$5.00 or (b) 100 times (subject to adjustment upon certain dilutive events) the
aggregate per share amount of all cash dividends and 100 times (subject to
adjustment upon certain dilutive events) the aggregate per share amount of all
non-cash dividends or other distributions (other than dividends payable in
Common Stock) declared on Common Stock since the last quarterly dividend payment
date for the Junior Preferred Stock (or since the date of issuance of the Junior
Preferred Stock if no such dividend payment date has occurred).
A holder of Junior Preferred Stock will be entitled to 100 votes (subject
to adjustment upon certain dilutive events) per share of Junior Preferred Stock
on all matters submitted to a vote of shareholders of the Company. Such holders
will vote together with the holders of Common Stock as a single class.
In the event of a merger or consolidation of the Company which results in
Common Stock being exchanged or changed for other stock, securities, cash and/or
other property, the shares of Junior Preferred
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Stock shall similarly be exchanged or changed in an amount per share equal to
100 times (subject to adjustment upon certain dilutive events) the aggregate
amount of stock, securities, cash and/or other property, as the case may be,
into which each share of Common Stock has been exchanged or changed.
In the event of liquidation, dissolution or winding up of the Company, a
holder of Junior Preferred Stock will be entitled to receive $100 per share,
plus accrued and unpaid dividends, before any distribution may be made to
holders of shares of stock of the Company ranking junior to the Junior Preferred
Stock, and the holders of Junior Preferred Stock are entitled to receive an
aggregate amount per share equal to 100 times (subject to adjustment upon
certain dilutive events) the aggregate amount to be distributed per share to
holders of Common Stock.
The Junior Preferred Stock is not subject to redemption. The terms of the
Junior Preferred Stock provide that the Company is subject to certain
restrictions with respect to dividends and distributions on and redemptions and
purchases of shares of stock of the Company ranking junior to or on a parity
with the Junior Preferred Stock in the event that payments of dividends or other
distributions payable on the Junior Preferred Stock are in arrears.
DESCRIPTION OF PREFERRED STOCK
The following statements with respect to the Preferred Stock are summaries
and are subject to the detailed provisions of the Certificate of Incorporation
and the By-Laws, as well as the certificate of designations relating to the
Preferred Stock (the "Certificate of Designation"). These statements do not
purport to be complete, or to give full effect to the provisions of statutory or
common law, and are subject to, and are qualified in their entirety by reference
to, the terms of the Certificate of Incorporation, the By-Laws, and the
Certificate of Designation, copies of which are filed as exhibits to the
Registration Statement and are incorporated by reference into this Prospectus.
GENERAL
The Certificate of Incorporation provides that the Company's Board of
Directors (the "Board of Directors") is authorized, without stockholder
approval, to provide for the issuance of up to 20,000,000 shares of preferred
stock, from time to time, in one or more series, and to fix any voting powers,
full or limited, and the designations, preferences and relative participating,
optional or other special rights, applicable to the shares to be included in any
such series and any qualifications, limitations or restrictions thereon. Thus,
without stockholder approval, the Company could authorize the issuance of
preferred stock with voting, conversion and other rights that could dilute the
voting power and other rights of holders of the Common Stock and other series of
preferred stock, including the Preferred Stock. No shares of preferred stock of
the Company (other than the Preferred Stock) are outstanding as of the date
hereof. However, 1,000,000 shares of Junior Preferred Stock have been authorized
and reserved for issuance in connection with the Rights described above in
"Description of Rights and Junior Preferred Stock."
The Board of Directors has designated 2,200,000 shares of the Company's
preferred stock as the Preferred Stock. When issued, the Preferred Stock was
fully paid and nonassessable. The holders of the Preferred Stock have no
preemptive rights to subscribe for any additional securities which may be issued
by the Company.
RANKING
The Preferred Stock, with respect to dividend rights and rights on
liquidation, winding up and dissolution of the Company, ranks prior to the
Common Stock and Junior Preferred Stock. While any shares of Preferred Stock are
outstanding, the Company may not authorize, create or issue any class of stock
that shall, with respect to dividend rights or rights upon liquidation, winding
up and dissolution of the Company, rank prior to the Preferred Stock without the
consent of the holders of two-thirds of the outstanding shares of Preferred
Stock. See "-- Voting Rights" below. The Company may, however, create additional
classes of stock or issue
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series of preferred stock ranking on a parity with the Preferred Stock with
respect to the payment of dividends or upon liquidation, dissolution and winding
up without the consent of any holder of Preferred Stock.
DIVIDENDS
Holders of shares of Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available therefor,
cash dividends at an annual rate of $30.00 per share (equivalent to $3.00 per
Depositary Share), payable quarterly in February 1, May 1, August 1 and November
1 of each year, except that if any such date is a Saturday, Sunday or legal
holiday then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday. Each such dividend is payable to holders of
record as they appear on the stock transfer books on such record dates, not more
than 60 nor less than 10 days preceding the payment dates thereof, as are fixed
by the Board of Directors. Dividends have accrued from the date of issuance of
the Preferred Stock. Dividends are cumulative from such date, whether or not in
any dividend period or periods there shall be funds of the Company legally
available for the payment of such dividends. Accumulations of dividends on
shares of Preferred Stock do not bear interest. Dividends payable on the
Preferred Stock for any period greater or less than a full dividend period are
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Dividends payable on the Preferred Stock for each full dividend period are
computed by dividing the annual dividend rate by four.
A certain debt agreement of the Company contains covenants restricting the
declaration or payment of any dividend or the making of any distribution in
respect of the Company's capital stock (other than a dividend or distribution
payable in capital stock of the Company), including Preferred Stock and Common
Stock, or the purchase, redemption or other acquisition or retirement of any
capital stock of the Company, including Preferred Stock and Common Stock, by the
Company or any subsidiary of the Company. At June 30, 1994, under the provisions
of this agreement, all of the retained earnings of the Company were available
for the payment of dividends. In addition, the Indenture relating to the
Debentures will contain a covenant restricting the Company's ability to declare
or pay dividends or distributions on its capital stock or repurchase, redeem or
otherwise acquire shares of its capital stock in certain circumstances as
described in "Description of Debentures -- Interest". There presently are no
other contractual agreements of the Company that limit the payment by the
Company of dividends on shares of Preferred Stock or Common Stock. However,
because the Company is primarily a holding company that conducts its business
through its wholly-owned subsidiaries, the Company's cash flow and consequent
ability to pay dividends on the Preferred Stock and the Common Stock are
primarily dependent upon the earnings of such subsidiaries, particularly
American, and on dividends and other payments therefrom. See "Description of
Debentures -- Subordination."
No full dividends shall be declared or paid or set apart for payment on
stock of the Company of any series ranking, as to dividends, on a parity with
(the "Parity Dividend Stock") or junior to (the "Junior Dividend Stock") the
Preferred Stock unless full dividends for the immediately preceding dividend
period on the Preferred Stock (including any accumulation in respect of unpaid
dividends for prior dividend periods) have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for such payment. When dividends are not so paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Preferred Stock
and any Parity Dividend Stock, dividends upon the Preferred Stock and such
Parity Dividend Stock shall be declared pro rata so that the amount of dividends
declared per share on the Preferred Stock and such Parity Dividend Stock shall
in all cases bear to each other the same ratio that accrued dividends for the
then-current dividend period per share on the shares of Preferred Stock
(including any accumulation in respect of unpaid dividends for prior dividend
periods) and accrued dividends, including required or permitted accumulations,
if any, on shares of such Parity Dividend Stock, bear to each other. Unless full
dividends on the Preferred Stock have been declared and paid or set apart for
payment for the immediately preceding dividend period (including any
accumulation in respect of unpaid dividends for prior dividend periods) (a) no
dividend or distribution (other than in shares of Junior Dividend Stock) may be
declared, set aside or paid on the Junior Dividend Stock, (b) the Company may
not repurchase, redeem or otherwise acquire any shares of its Junior Dividend
Stock (except by conversion into or exchange for Junior Dividend Stock and
except for a redemption, purchase or other acquisition of shares of Junior
Dividend Stock
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made for the purpose of an employee incentive or benefit plan of the Company or
any of its subsidiaries) and (c) the Company may not, directly or indirectly,
repurchase, redeem or otherwise acquire any shares of Preferred Stock or Parity
Dividend Stock (except by conversion into or exchange for Junior Dividend Stock)
other than pursuant to a concurrent redemption of all of the outstanding shares
of Preferred Stock or except in accordance with a purchase or exchange offer
made by the Company to all holders of Preferred Stock and Parity Dividend Stock.
The Company does not currently have outstanding any Parity Dividend Stock.
LIQUIDATION RIGHTS
In the case of the voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of shares of Preferred Stock
will be entitled to receive the liquidation preference of $500 per share
(equivalent to $50 per Depositary Share), plus an amount equal to any accrued
and unpaid dividends to the payment date, before any payment or distribution is
made to the holders of Common Stock or any series or class of stock hereafter
issued that ranks junior as to liquidation rights to the Preferred Stock
("Junior Liquidation Stock"), but the holders of the shares of the Preferred
Stock will not be entitled to receive the liquidation preference of such shares
until the liquidation preference of any other series or class of stock hereafter
issued that ranks senior as to liquidation rights to the Preferred Stock
("Senior Liquidation Stock") has been paid in full. If, upon such voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company, the assets of the Company are insufficient to pay in full the amounts
payable thereon with respect to the Preferred Stock and any series or classes of
stock ranking on a parity with the Preferred Stock as to liquidation,
dissolution or winding up, the holders of the Preferred Stock and of such other
class or series of stock will share ratably in any such distribution of assets
of the Company (after payment of the liquidation preference of the Senior
Liquidation Stock) first in proportion to their respective liquidation
preferences until such preferences are paid in full, and then in proportion to
their respective amounts of accrued but unpaid dividends. After payment in full
of the liquidation preference of the shares of the Preferred Stock and accrued
dividends, the holders of such shares will not be entitled to any further
participation in any distribution of assets by the Company. Neither the sale of
all or substantially all the assets of the Company, nor the merger or
consolidation of the Company into or with any other corporation, will be deemed
to be a liquidation, dissolution or winding up of the Company.
REDEMPTION
The Preferred Stock is not subject to any mandatory redemption, sinking
fund or other obligation of the Company to redeem or retire the Preferred Stock,
and will not be redeemable prior to February 1, 1996. On and after such date,
the Preferred Stock is redeemable at the option of the Company upon notice at
any time, in whole or in part, at the following redemption prices per share
(expressed as a percentage of the $500 liquidation preference thereof), plus
accrued and unpaid dividends, if any, up to but excluding the redemption date,
if redeemed during the twelve-month period commencing February 1 of the years
indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---------------------------- ----------
<S> <C>
1996........................ 104.2%
1997........................ 103.6%
1998........................ 103.0%
1999........................ 102.4%
2000........................ 101.8%
2001........................ 101.2%
2002........................ 100.6%
2003 and thereafter......... 100.0%
</TABLE>
If fewer than all the outstanding shares of Preferred Stock are to be redeemed,
the Company will select those shares to be redeemed by lot or pro rata or in
such manner as the Board of Directors may determine.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of Preferred
Stock to be redeemed at the address shown on the stock transfer books. After the
redemption date, dividends will cease to accumulate on the shares of Preferred
Stock called for redemption and all rights of the holders of such shares will
terminate, except the right to receive the redemption price without interest.
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<PAGE> 40
VOTING RIGHTS
The holders of the Preferred Stock have no voting rights except as
described below or as required by law.
At any time dividends in an aggregate amount equal to at least six
quarterly dividends on the Preferred Stock (whether or not consecutive) shall
have accrued and be unpaid, the maximum authorized number of directors of the
Company will be increased by two and the holders of the Preferred Stock shall
have the right to a separate class vote (together with the holders of shares of
any Parity Dividend Stock upon which like voting rights have been conferred and
are exercisable ("Voting Parity Stock")) to elect two members of the Board of
Directors at the next annual meeting of stockholders and thereafter until
dividends on the Preferred Stock have been paid or declared and set apart for
payment. Upon payment or declaration and setting apart of funds for payment of
all such dividends in arrears, the term of office of each director elected will
immediately terminate and the number of directors constituting the entire Board
of Directors of the Company will be reduced by the number of directors elected
by the holders of the Preferred Stock and Voting Parity Stock.
Additionally, without the affirmative vote of the holders of two-thirds of
the shares of Preferred Stock then outstanding (voting separately as a class
together with any Voting Parity Stock), the Company may not, either directly or
indirectly or through merger or consolidation with any other corporation, (i)
approve the authorization, creation or issuance of, or an increase in the
authorized or issued amount of, any class or series of stock ranking prior to
the shares of Preferred Stock in rights and preferences or any security
convertible into any such class or series of stock, or (ii) amend, alter or
repeal its Certificate of Incorporation or the Certificate of Designation so as
to materially and adversely affect the preferences, rights, powers, privileges,
qualifications or restrictions of the Preferred Stock. An amendment which
increases the number of authorized shares of or authorizes the creation or
issuance of other classes or series of preferred stock ranking junior to or on a
parity with the Preferred Stock with respect to the payment of dividends or
distribution of assets on liquidation, dissolution or winding up shall not be
considered to be such an adverse change.
CONVERSION
Shares of the Preferred Stock are convertible at the option of the holder
thereof at any time into such number of whole shares of Common Stock as is equal
to the aggregate liquidation preference of the shares of Preferred Stock
surrendered for conversion divided by the conversion price of $78.75 per share
of Common Stock, subject to adjustment as described below. Shares of Preferred
Stock surrendered for conversion during the period after any dividend payment
record date and prior to the corresponding dividend payment date must be
accompanied by payment of an amount equal to the dividend payable on such shares
on such dividend payment date. Shares of Preferred Stock called for redemption
will not be convertible after the close of business on the business day
preceding the date fixed for redemption, unless the Company defaults in payment
of the redemption price.
The initial conversion price of $78.75 per share of Common Stock is subject
to adjustment (under formulae set forth in the Certificate of Designation) in
certain events, including: (i) the issuance of Common Stock as a dividend or
distribution on Common Stock of the Company; (ii) certain subdivisions and
combinations of the Common Stock; (iii) the issuance to all holders of Common
Stock of certain rights or warrants to purchase Common Stock; (iv) the
distribution to all holders of Common Stock of shares of capital stock of the
Company (other than Common Stock) or evidences of indebtedness of the Company or
assets (including securities, but excluding those rights, warrants, dividends
and distributions referred to above and dividends and distributions in
connection with the liquidation, dissolution or winding up of the Company or
paid in cash); (v) distributions consisting of cash, excluding any quarterly
cash dividend on the Common Stock to the extent that the aggregate cash dividend
per share of Common Stock in any quarter does not exceed the greater of (x) the
amount per share of Common Stock of the next preceding quarterly cash dividend
on the Common Stock to the extent that such preceding quarterly dividend did not
require an adjustment of the Conversion Price pursuant to this clause (v) (as
adjusted to reflect subdivisions or combinations of the Common Stock), and (y)
3.75 percent of the average of the daily Closing Prices (as defined in the
Certificate of Designation) of the Common Stock for the ten consecutive Trading
Days (as defined in the Certificate of Designation) immediately prior to the
date of declaration of such dividend, and
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<PAGE> 41
excluding any dividend or distribution in connection with the liquidation,
dissolution or winding up of the Company; and (vi) payment in respect of a
tender or exchange offer by the Company or any subsidiary of the Company for the
Common Stock to the extent that the cash and value of any other consideration
included in such payment per share of Common Stock exceeds the current market
price per share of Common Stock on the last Trading Day preceding the date on
which the Company becomes irrevocably obligated to make such payment. If any
adjustment is required to be made as set forth in clause (v) above as a result
of a distribution which is a quarterly dividend, such adjustment would be based
upon the amount by which such distribution exceeds the amount of the quarterly
cash dividend permitted to be excluded pursuant to such clause (v). If an
adjustment is required to be made as set forth in (v) above as a result of a
distribution which is not a quarterly dividend, such adjustment would be based
upon the full amount of such distribution.
In the event that the rights issued pursuant to the Rights Agreement (as
defined below) are separately distributed to holders of Common Stock upon the
occurrence of certain events specified in the Rights Agreement or otherwise,
such that holders of Preferred Stock would thereafter not be entitled to receive
any such rights in respect of the Common Stock issuable upon conversion of such
Preferred Stock, the conversion price of the Preferred Stock will be adjusted as
provided in clause (iv) of the preceding paragraph.
The Company from time to time may to the extent permitted by law reduce the
conversion price by any amount for any period of at least 20 days, in which case
the Company shall give at least 15 days' notice of such reduction, if the Board
of Directors has made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive. The Company
may, at its option, make such reductions in the conversion price, in addition to
those set forth above, as the Board of Directors deems advisable to avoid or
diminish any income tax to holders of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes.
If any transaction shall occur (including without limitation (i) any
recapitalization or reclassification of shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination of the Common Stock),
(ii) any consolidation or merger of the Company with or into another person or
any merger of another person into the Company (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Common
Stock), (iii) any sale or transfer of all or substantially all of the assets of
the Company, or (iv) any compulsory share exchange pursuant to which either
shares of Common Stock shall be converted into the right to receive other
securities, cash or other property, or, in the case of a sale or transfer of all
or substantially all of the assets of the Company, the holders of Common Stock
shall be entitled to receive other securities, cash or other property, then
appropriate provision shall be made so that the holder of each share of
Preferred Stock then outstanding shall have the right thereafter to convert such
share only into (x) in the case of any such transaction that does not constitute
a Common Stock Fundamental Change (as defined below) and subject to funds being
legally available for such purpose under applicable law at the time of such
conversion, the kind and amount of the securities, cash or other property that
would have been receivable upon such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange by a holder of the
number of shares of Common Stock issuable upon conversion of such share of
Preferred Stock immediately prior to such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange, after giving effect, in
the case of any Non-Stock Fundamental Change (as defined below), to any
adjustment in the conversion price in accordance with clause (i) of the
following paragraph, and (y) in the case of any such transaction that
constitutes a Common Stock Fundamental Change, common stock of the kind received
by holders of Common Stock as a result of such Common Stock Fundamental Change
in an amount determined in accordance with clause (ii) of the following
paragraph. The company formed by such consolidation or resulting from such
merger or that acquires such assets or that acquires the Company's shares, as
the case may be, shall make provisions in its certificate or articles of
incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent document shall
provide for adjustments that, for events subsequent to the effective date of
such certificate or articles of incorporation or other constituent documents,
shall be as nearly equivalent as may be practicable to the relevant adjustments
provided for in the preceding paragraphs and in this paragraph.
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<PAGE> 42
Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as follows:
(1) in the case of a Non-Stock Fundamental Change, the conversion
price of the shares of Preferred Stock immediately following such Non-Stock
Fundamental Change shall be the lower of (A) the conversion price in effect
immediately prior to such Non-Stock Fundamental Change, but after giving
effect to any other prior adjustments effected pursuant to the preceding
paragraphs, and (B) the product of (1) the greater of the Applicable Price
(as defined below) and the then applicable Reference Market Price (as
defined below) and (2) a fraction, the numerator of which is $500 and the
denominator of which is (x) the amount of the redemption price for one
share of Preferred Stock if the redemption date were the date of such
Non-Stock Fundamental Change (or, for the twelve-month periods commencing
February 1, 1994 and 1995, the product of 105.4% and 104.8%, respectively,
times $500) plus (y) any then-accumulated and unpaid dividends on such
Preferred Stock; and
(2) in the case of a Common Stock Fundamental Change, the conversion
price of the shares of Preferred Stock immediately following such Common
Stock Fundamental Change shall be the conversion price in effect
immediately prior to such Common Stock Fundamental Change, but after giving
effect to any other prior adjustments effected pursuant to the preceding
paragraphs, multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as defined below) and the denominator of which is
the Applicable Price; provided, however, that in the event of a Common
Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of the
successor, acquiror, or other third party (and cash, if any, paid with
respect to any fractional interests in such common stock resulting from
such Common Stock Fundamental Change) and (B) all of the Common Stock of
the Company shall have been exchanged for, converted into, or acquired for,
common stock of the successor, acquiror or other third party (and any cash
with respect to fractional interests), the conversion price of the shares
of Preferred Stock immediately following such Common Stock Fundamental
Change shall be the conversion price in effect immediately prior to such
Common Stock Fundamental Change multiplied by a fraction, the numerator of
which is one (1) and the denominator of which is the number of shares of
common stock of the successor, acquiror, or other third party received by a
holder of one share of Common Stock as a result of such Common Stock
Fundamental Change.
Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a holder may receive significantly
different consideration upon conversion. In the event of a Non-Stock Fundamental
Change, the holder has the right to convert shares of Preferred Stock into the
kind and amount of the shares of stock and other securities or property or
assets (including cash), except as otherwise provided above, as is determined by
the number of shares of Common Stock receivable upon conversion at the
conversion price as adjusted in accordance with clause (i) of the preceding
paragraph. However, in the event of a Common Stock Fundamental Change in which
less than 100% of the value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other third party, a holder
of a share of Preferred Stock who converts such share following the Common Stock
Fundamental Change will receive consideration in the form of such common stock
only, whereas a holder who converted such share prior to the Common Stock
Fundamental Change would have received consideration in the form of such common
stock as well as any other securities or assets (which may include cash)
issuable upon conversion of such share of Preferred Stock immediately prior to
such Common Stock Fundamental Change.
The term "Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the reported last sale price for one share of
the Common Stock (determined as provided in the Certificate of Designation)
during the 10 Trading Days immediately prior to the record date for the
determination of the holders of Common Stock entitled to receive cash,
securities,
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<PAGE> 43
property or other assets in connection with such Non-Stock Fundamental Change or
Common Stock Fundamental Change or, if there is no such record date, prior to
the date upon which the holders of the Common Stock shall have the right to
receive such cash, securities, property or other assets.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that, for the 10 Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the National Market System of NASDAQ; provided, however, that a
Fundamental Change shall not be a Common Stock Fundamental Change unless either
(i) the Company continues to exist after the occurrence of such Fundamental
Change and the outstanding shares of Preferred Stock continue to exist as
outstanding shares of Preferred Stock, or (ii) not later than the occurrence of
such Fundamental Change, the outstanding shares of Preferred Stock are converted
into or exchanged for shares of convertible preferred stock of a corporation
succeeding to the business of the Company, which convertible preferred stock has
powers, preferences and relative, participating, optional or other rights, and
qualifications, limitations and restrictions substantially similar to those of
the Preferred Stock.
The term "Fundamental Change" means the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Common Stock of the Company shall be exchanged for, converted into,
acquired for or shall constitute solely the right to receive cash, securities,
property or other assets (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise); provided, however, in the case of any such
series of transactions or events, for purposes of adjustment of the conversion
price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for, or shall constitute solely the right to
receive, such cash, securities, property or other assets, but the adjustment
shall be based upon the consideration that the holders of Common Stock received
in the transaction or event as a result of which more than 50% of the Common
Stock of the Company shall have been exchanged for, converted into, or acquired
for, or shall constitute solely the right to receive, such cash, securities,
property or other assets; and provided, further, that such term does not include
(i) any such transaction or event in which the Company and/or any of its
subsidiaries are the issuers of all the cash, securities, property or other
assets exchanged, acquired or otherwise issued in such transaction or event, or
(ii) any such transaction or event in which the holders of Common Stock receive
securities of an issuer other than the Company or any of its subsidiaries if,
immediately following such transaction or event, such holders hold a majority of
the securities having the power to vote normally in the election of directors of
such other issuer outstanding immediately following such transaction or other
event.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the reported last sale price for one share of
the common stock received by holders of Common Stock (determined as provided in
the Certificate of Designation) in such Common Stock Fundamental Change during
the 10 Trading Days immediately prior to the date fixed for the determination of
the holders of Common Stock entitled to receive such common stock or, if there
is no such date, prior to the date upon which the holders of Common Stock shall
have the right to receive such common stock.
The term "Reference Market Price" shall initially mean $42.3333 and, in the
event of any adjustment to the conversion price other than as a result of a
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of $78.75 per
share.
No adjustment to the conversion price will be required to be made in any
case until cumulative adjustments amount to 1% or more of the conversion price.
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<PAGE> 44
DESCRIPTION OF DEPOSITARY SHARES
The Depositary Shares were sold by the Company on February 4, 1993 in
reliance on Section 4(2) under the Securities Act to Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co. (the "Initial Purchasers"), who informed
the Company that they resold the Depositary Shares (i) within the United States
to Qualified Institutional Buyers (as defined in Rule 144A under the Securities
Act) in reliance on Rule 144A under the Securities Act, (ii) within the United
States to a limited number of other institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that, prior
to their purchase, delivered a letter to the Initial Purchasers and the Company
containing certain representations and agreements and (iii) outside the United
States to certain persons other than U.S. persons in reliance on Regulation S
under the Securities Act.
GENERAL
Each Depositary Share represents 1/10 of a share of Preferred Stock. The
Company has deposited the shares of Preferred Stock underlying the Depositary
Shares pursuant to the Deposit Agreement. Subject to the terms of the Deposit
Agreement, each owner of Depositary Shares is entitled, in proportion to the
applicable fractional interest in a share of Preferred Stock underlying such
Depositary Shares, to all the rights and preferences of the Preferred Stock
underlying such Depositary Shares (including dividend, voting, redemption,
conversion and liquidation rights).
The Depositary Shares are evidenced by receipts ("Depositary Receipts")
issued pursuant to the Deposit Agreement. Immediately following the issuance and
delivery of the Preferred Stock by the Company to the Depositary, the Company
caused the Depositary to issue, on behalf of the Company, the Depositary
Receipts evidencing the Depositary Shares to the initial purchasers thereof.
Copies of the Deposit Agreement and Form of Depositary Receipt may be obtained
from the Company upon request, and the following summary is qualified in its
entirety by reference thereto.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date, subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the Depositary.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares in
proportion to the numbers of Depositary Shares owned by such holders on the
relevant record date, subject to certain obligations of holders to file proofs,
certificates and other information and to pay certain charges and expenses to
the Depositary, unless the Depositary determines that it is not feasible to make
such distribution, in which case the Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
WITHDRAWAL OF STOCK
Upon surrender of Depositary Receipts at the corporate trust office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption), a holder of Depositary Shares evidenced thereby is entitled to have
the Depositary deliver to such holder at such office to or upon his order, the
number of whole shares of Preferred Stock underlying the Depositary Shares
evidenced by the surrendered Depositary Receipts, and any money or other
property represented by such Depositary Shares. Holders of Depositary Shares
will be entitled to receive whole shares of Preferred Stock on the basis of one
share of Preferred Stock for each ten Depositary Shares, but holders of such
whole shares of Preferred Stock will not thereafter be entitled to receive
Depositary Shares therefor. If the Depositary Receipts delivered by the holder
evidence a number of Depositary Shares in excess of the number of Depositary
Shares representing the number of whole shares of Preferred Stock to be
withdrawn, the Depositary will deliver to such holder at the same time a new
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<PAGE> 45
Depositary Receipt evidencing such excess number of Depositary Shares. The
Depositary also acts as Transfer Agent and Registrar for the Preferred Stock.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by the
Depositary, the Depositary will redeem as of the same redemption date the number
of Depositary Shares relating to the shares of Preferred Stock so redeemed,
provided the Company shall have paid in full to the Depositary the redemption
price of the Preferred Stock to be redeemed plus an amount equal to any accrued
and unpaid dividends thereon to the date fixed for redemption. The redemption
price per Depositary Share will be equal to 1/10 of the redemption price and any
other amounts per share payable with respect to such shares of Preferred Stock.
If fewer than all of the Depositary Shares are to be redeemed, the Depositary
Shares to be redeemed will be selected by lot, pro rata or other equitable
method, in each case as may be determined by the Company.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of voting rights pertaining to the number of shares of Preferred Stock
underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
underlying such Depositary Shares in accordance with such instructions, and the
Company will agree to take all reasonable action which may be deemed necessary
by the Depositary in order to enable the Depositary to do so. The Depositary
will abstain from voting shares of Preferred Stock to the extent it does not
receive special instructions from the holders of Depositary Shares relating to
such Preferred Stock.
CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, are not convertible into Common Stock or
any other securities or property of the Company. Nevertheless, the Depositary
Receipts may be surrendered by holders thereof to the Depositary with written
instructions to the Depositary to instruct the Company to cause conversion of
the Preferred Stock represented by the Depositary Shares evidenced by such
receipts into whole shares of Common Stock, and the Company has agreed that upon
receipt of such instructions and any amounts payable in respect thereof, it will
cause the conversion thereof utilizing the same procedures as those provided for
delivery of Preferred Stock to effect such conversions. If the Depositary Shares
represented by a Depositary Receipt are to be converted in part only, a new
Depositary Receipt or Receipts will be issued for any Depositary Shares not to
be converted. See "Description of Preferred Stock -- Conversion."
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the existing holders of Depositary Shares
will not be effective unless such amendment has been approved by the record
holders of at least a majority (or, in the case of amendments relating to or
affecting rights to receive dividends or distributions, or voting, redemption or
conversion rights, two-thirds) of the Depositary Shares then outstanding.
The Deposit Agreement may be terminated by the Company upon not less that
60 days' notice whereupon the Depositary shall deliver or make available to each
holder of Depositary Receipts, upon surrender of the Depositary Receipts held by
such holder, such number of whole or fractional shares of Preferred Stock
represented by such receipts. The Deposit Agreement will terminate automatically
if (i) all outstanding Depositary Shares relating thereto have been redeemed,
(ii) there has been a final distribution in respect of the Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company
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<PAGE> 46
and such distribution has been distributed to the holders of Depositary Receipts
or (iii) each share of Preferred Stock shall have been converted into or
exchanged for shares of Common Stock.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay the fees and expenses of the Depositary in connection with the
performance of its duties under the Deposit Agreement. Holders of Depositary
Receipts will pay transfer and other taxes and governmental charges and such
other charges as are expressly provided in the Deposit Agreement to be for their
accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary, which successor Depositary must be appointed within 60
days after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward to holders of Depositary Shares any reports and
communications from the Company which are received by the Depositary.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performing their
duties thereunder without negligence or willful misconduct, and the Company and
the Depositary will not be obligated to prosecute or defend any legal proceeding
in respect of any Depositary Shares or Preferred Stock unless satisfactory
indemnity is furnished. The Company and the Depositary will be entitled to rely
on advice of counsel and accountants, on information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Shares or other
persons believed to be authorized or competent and on documents believed to be
genuine.
In the event the Depositary shall receive conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and the
Company, on the other hand, the Depositary shall be entitled to act on such
claims, requests or instructions received from the Company.
BOOK-ENTRY, DELIVERY AND FORM
The Depositary Receipts have been issued in fully registered form, without
coupons. Depositary Shares held by "qualified institutional buyers", as defined
in Rule 144A under the Securities Act ("QIBs"), but not by other purchasers, are
evidenced by a global Depositary Receipt (the "Global Certificate") which has
been deposited with DTC and registered in the name of Cede & Co. ("Cede") as
DTC's nominee. Except as set forth below, the Global Certificate may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
QIBs may hold their interests in the Global Certificate directly through
DTC, or indirectly through organizations which are participants in DTC (the
"Participants"). Transfers between Participants will be effected in the ordinary
way in accordance with DTC rules and will be settled in New York Clearing House
funds. The laws of some states require that certain persons take physical
delivery in definitive form of securities. Consequently, the ability to transfer
beneficial interests in the Global Certificate to such persons may be limited.
QIBs who are not Participants may beneficially own interests in the Global
Certificate held by DTC only through Participants or certain banks, brokers,
dealers, trust companies and other parties that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). So
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long as Cede, as the nominee of DTC, is the registered owner of the Global
Certificate, Cede for all purposes will be considered the sole holder of the
Global Certificate. Except as provided below, owners of beneficial interests in
the Global Certificate will not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form, and will not be considered the holders thereof.
Payment of dividends and the redemption price of the Global Certificate
will be made to Cede, the nominee for DTC, as the registered owner of the Global
Certificate by wire transfer of immediately available funds. Neither the
Company, the Depositary nor any Transfer Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Certificate or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
With respect to any payment of dividends on or the redemption price of the
Global Certificate, DTC's practice is to credit Participants' accounts on the
payment date therefor with payments in amounts proportionate to their respective
beneficial interests in the shares represented by the Global Certificate as
shown on the records of DTC, unless DTC has reason to believe that it will not
receive payment on such payment date. Payments by Participants to owners of
beneficial interests in shares represented by the Global Certificate held
through such Participants will be the responsibility of such Participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and banks, the ability of a person having a
beneficial interest in shares represented by the Global Certificate to pledge
such interest to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of such interest, may be affected by the
lack of a physical certificate evidencing such interest.
Neither the Company nor the Transfer Agent will have any responsibility for
the performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 90 days, the Company
will cause Depositary Receipts to be issued in definitive form in exchange for
the Global Certificate.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material United States federal
income tax considerations relevant to an exchange of Preferred Stock for
Debentures and the ownership, disposition and conversion of Debentures by
persons acquiring Debentures pursuant to the Exchange Offer. To the extent it
relates to matters of law or legal conclusion, this summary constitutes the
opinion of Debevoise & Plimpton, special counsel to the Company. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, Internal Revenue Service ("IRS") rulings, official
pronouncements and judicial decisions, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive effect, or
different interpretations. This summary is applicable only to holders who are
United States persons for federal income tax purposes and who hold Preferred
Stock as a capital asset and who will hold Debentures and any Common Stock
received on conversion of Debentures as capital assets. For a discussion of
certain material United States federal income and estate tax considerations that
may be relevant to non-United States persons, see "Certain Federal Tax
Considerations for Non-United States Persons".
This summary does not discuss all the tax consequences that may be relevant
to a particular holder in light of the holder's particular circumstances and it
is not intended to be applicable in all respects to all categories of investors,
some of whom--such as insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons that hold Preferred Stock or the Debentures received in the
exchange as a position in a "straddle", as part of a "synthetic security",
"hedge", "conversion transaction" or other integrated investment or persons
whose functional currency is
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other than United States dollars--may be subject to different rules not
discussed below. In addition, this summary does not address any state, local or
foreign tax considerations that may be relevant to a holder's decision to
exchange Preferred Stock for Debentures pursuant to the Exchange Offer.
References in this discussion and below under the caption "Certain Federal
Tax Considerations For Non-United States Persons" to a holder of Preferred Stock
includes a holder of Depositary Shares.
ALL PREFERRED STOCK HOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE EXCHANGE
OF PREFERRED STOCK FOR DEBENTURES AND OF THE OWNERSHIP, CONVERSION AND
DISPOSITION OF DEBENTURES RECEIVED IN THE EXCHANGE IN LIGHT OF THEIR OWN
PARTICULAR CIRCUMSTANCES.
EXCHANGE OF PREFERRED STOCK FOR DEBENTURES
The exchange of Preferred Stock for Debentures pursuant to the Exchange
Offer will be a taxable event. If, with respect a particular holder, such
exchange satisfies one of the tests of section 302 of the Code described below,
it will be treated as a transaction in which capital gain or loss is recognized,
rather than as a dividend. The tests under Section 302 of the Code are applied
on a shareholder-by-shareholder basis; therefore, whether an exchange will be
treated as a transaction in which capital gain or loss is recognized or as a
dividend with respect to a particular holder will depend on that holder's
particular facts and circumstances. If the exchange of Preferred Stock for
Debentures is treated as a transaction in which capital gain or loss is
recognized with respect to a particular holder, the capital gain or loss will be
based on the difference between the fair market value of the Debentures received
in the exchange and such holder's adjusted tax basis in the Preferred Stock
surrendered therefor. Such capital gain or loss will be long-term capital gain
or loss if the Preferred Stock surrendered in the exchange was held by such
holder for more than one year. The exchanging holder's tax basis in the
Debentures received in the exchange will equal the fair market value of such
Debentures at the time of the exchange and the holding period for such
Debentures will begin on the day after the day on which the Debentures are
acquired by such holder.
Pursuant to section 302 of the Code, an exchange will be treated as a
transaction in which gain or loss is recognized if, after giving effect to the
constructive ownership rules of section 318 of the Code, the exchange (i)
represents a "complete termination" of the exchanging holder's stock interest in
the Company, (ii) is "substantially disproportionate" with respect to the
exchanging holder or (iii) is "not essentially equivalent to a dividend" with
respect to the exchanging holder, all within the meaning of section 302(b) of
the Code. Under the constructive ownership rules of section 318 of the Code, a
holder of a Debenture will be treated as owning the Common Stock into which such
Debenture is convertible. Accordingly, an exchange pursuant to the Exchange
Offer could not, standing alone, satisfy the "complete termination" or the
"substantially disproportionate" tests. An exchange will be "not essentially
equivalent to a dividend" as to a particular holder if it results in a
"meaningful reduction" in such holder's interest in the Company (after
application of the constructive ownership rules of section 318 of the Code).
Because the conversion price of a Debenture is higher than that of the
equivalent amount of Preferred Stock to be surrendered therefor, an exchange of
Preferred Stock for Debentures would, standing alone, result in some reduction
in an exchanging holder's constructive stock interest in the Company. There is
no authority, however, on whether such reduction would constitute a "meaningful
reduction" in a particular holder's interest in the Company. No assurance can be
given that any of these tests will be satisfied. EACH HOLDER SHOULD CONSULT ITS
OWN TAX ADVISOR AS TO ITS ABILITY TO SATISFY ANY OF THE FOREGOING TESTS,
POSSIBLY BY DISPOSING OF A PORTION OF ITS STOCK INTEREST IN THE COMPANY
CONTEMPORANEOUSLY, AND AS PART OF AN INTEGRATED PLAN, WITH THE EXCHANGE OF
PREFERRED STOCK FOR DEBENTURES, IN LIGHT OF ITS OWN PARTICULAR CIRCUMSTANCES.
If an exchange is treated as a dividend with respect to a particular
exchanging holder under section 302 of the Code, such holder (i) will not
recognize any loss on the exchange and (ii) will recognize dividend income
(rather than capital gain) in an amount equal to the fair market value of the
Debentures (and any cash in lieu of fractional Debentures) received (without
regard to such holder's basis in the Preferred Stock surrendered in
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the exchange), to the extent of its proportionate share of the Company's current
or accumulated earnings and profits. Such holder's tax basis in the Debentures
generally will equal the fair market value of such Debentures at the time of the
exchange (without regard to such holder's basis in the Preferred Stock
surrendered in the exchange). The holder's adjusted tax basis in its Preferred
Stock surrendered in the exchange will be transferred to any remaining Preferred
Stock held by such holder or, if such holder does not retain any Preferred
Stock, to any Common Stock held by such holder. If the holder does not retain
any stock ownership in the Company, it is unclear whether the holder will be
permitted to add such basis to any Debentures received in the exchange or will
lose such basis entirely. The amount treated as a dividend will qualify for the
70% dividends received deduction for corporate shareholders, subject to the
minimum holding period requirement under section 246(c) of the Code and other
applicable requirements. Section 1059 of the Code, however, would require a
corporate shareholder to reduce its tax basis (and possibly to recognize gain)
in any stock of the Company held by it by the nontaxed portion of any such
dividend. The holding period for the Debentures will begin on the day after the
day on which the Debentures are acquired by the exchanging holder.
INTEREST AND ORIGINAL ISSUE DISCOUNT ON DEBENTURES
In accordance with sections 1271 through 1275 of the Code and the final
Treasury Regulations promulgated thereunder (the "OID Regulations"), a debt
instrument bears original issue discount ("OID") if its "stated redemption price
at maturity" exceeds its "issue price" by more than a de minimis amount. The
issue price of the Debentures will be their fair market value at the time of the
exchange. The stated redemption price at maturity of a debt instrument generally
includes all amounts payable other than "qualified stated interest" (i.e.,
payments that are unconditionally required to be paid at least annually at a
single fixed rate over the term of the instrument). Because the Company has the
right to elect to extend the interest payment period to a period of up to 20
consecutive quarterly periods, none of the payments of stated interest on the
Debentures will be qualified stated interest. Thus, the Debentures will have OID
in an amount equal to the excess of all payments required to be made under the
Debentures over their issue price. A holder will be required to include OID in
income, based on a constant yield method, before the receipt of cash
attributable to such income, regardless of such holder's regular method of
accounting. As a result, during any period in which the Company has elected to
extend the interest payment period a holder generally would be required to
include OID in income but would not receive cash from the Company sufficient to
pay tax thereon. A holder will not recognize any income upon the receipt of a
payment of stated interest on a Debenture; instead, a holder's basis in the
Debentures will be increased by the amount of OID includible in income and
reduced by all payments made on the Debentures.
The amount of OID includible in income is the sum of the daily portions of
OID with respect to such Debenture for each day during the taxable year on which
such holder held such Debenture. The daily portion of OID on a Debenture is
determined by allocating to each day in any "accrual period" a ratable portion
of the OID allocable to such accrual period. The term "accrual period" means a
period of any length selected by the holder, provided that each accrual period
must be no longer than one year and each scheduled payment date of principal or
interest on a Debenture must occur either on the final day of an accrual period
or the first day of an accrual period. The amount of OID allocable to an accrual
period is the product of the "adjusted issue price" at the beginning of the
accrual period and the "yield to maturity" of the Debenture. For the first
accrual period, the adjusted issue price of the Debentures will be their issue
price. Thereafter, the adjusted issue price of a Debenture generally will be its
issue price increased by any OID previously includible in the gross income of
the holder and decreased by any payment previously made on the Debenture.
Under the OID Regulations, in computing the yield to maturity of an
instrument the issuer is deemed to elect to exercise any option available to it
under the instrument if doing so will minimize the yield on the instrument. If
the issuer does not exercise such option, then, solely for purposes of the
accrual of OID, the yield and maturity of the instrument are redetermined by
treating the instrument as reissued for an amount equal to its adjusted issue
price. Thus, for example, in the case of the first accrual period with respect
to the Debentures, the OID Regulations require that the yield to maturity of the
Debentures be computed assuming that the Company would elect to extend the
interest payment period to the maximum 20 consecutive quarters
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(because doing so would minimize the yield on the Debentures). Assuming
quarterly accrual periods, the aggregate amount of OID for the first quarterly
accrual period would equal the product of the issue price and the yield to
maturity (as so determined). If, contrary to this assumption under the OID
Regulations, the Company does not elect to extend the interest payment period
and pays the stated interest at the end of the first quarterly interest payment
period, the instrument will be treated, solely for OID purposes, as having been
reissued on such payment date. The yield to maturity would then be recomputed,
again assuming that the Company would elect to extend the interest payment
period to the maximum 20 consecutive quarters (again, because doing so would
minimize the yield on the Debentures). The amount of OID for this second accrual
period would equal the product of such recomputed yield to maturity and the
adjusted issue price on the date of such deemed reissuance (i.e., the issue
price plus the amount of previously accrued OID minus the interest previously
paid on the Debentures). In the case of the final accrual period, the allocable
OID is the difference between the amount payable at maturity and the adjusted
issue price at the beginning of the accrual period.
If an exchange of Preferred Stock for Debentures is treated as a dividend
to the exchanging holder (see "-- Exchange of Preferred Stock for Debentures",
above), and the exchanging holder's basis in the Preferred Stock surrendered in
the exchange is transferred to the Debentures, such holder may have acquisition
premium with respect to the Debentures, which would reduce the amount includible
in such holder's income as OID in each taxable year.
SALE OR REDEMPTION OF DEBENTURES
Generally, a sale or redemption of Debentures will result in taxable gain
or loss equal to the difference between the amount realized and the holder's tax
basis in the Debentures. Such gain or loss would be long-term capital gain or
loss if the Debentures were held for more than one year.
CONVERSION OF DEBENTURES
In general, no gain or loss will be recognized on conversion of Debentures
solely into Common Stock. The tax basis for the Common Stock received upon such
conversion will be equal to the tax basis of the Debentures converted (reduced
by the portion of such basis allocable to any fractional Common Stock interest
paid in cash). The holding period for the Common Stock generally will include
the holding period of the Debentures converted. However, the holding period for
the Common Stock allocable to original issue discount accrued during the
holder's holding period for the Debentures converted may be treated as
commencing on the day after the date of the conversion. A holder generally will
recognize gain (or loss) upon a conversion to the extent that any cash paid in
lieu of a fractional share of Common Stock exceeds (or is less than) its tax
basis in such fractional share.
Conversion of the Debentures into cash, property or securities other than
stock of the Company (or stock of a successor to the Company) as a result of a
Fundamental Change or other transaction with similar effect will be treated as a
redemption of the Debentures.
SALE OR DISPOSITION OF COMMON STOCK
A holder will recognize gain or loss on the sale or exchange of Common
Stock received upon conversion of a Debenture equal to the difference between
the amount realized on such sale or exchange and the holder's adjusted tax basis
in the Common Stock sold or exchanged. Such gain or loss would be long-term
capital gain or loss if the holder's holding period for the Common Stock were
more than one year. See "-- Conversion of Debentures".
ADJUSTMENT OF CONVERSION PRICE
Pursuant to Treasury Regulations promulgated under section 305 of the Code,
a holder of a Debenture will be treated as having received a constructive
distribution from the Company upon an adjustment in the conversion price of the
Debentures if (i) as a result of such adjustment, the proportionate interest of
such holder in the assets or earnings and profits of the Company were increased
and (ii) the adjustment was not made pursuant to a bona fide, reasonable
anti-dilution formula. An adjustment in the conversion price would not be
considered made pursuant to such a formula if the adjustment was made to
compensate for certain
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taxable distributions with respect to the stock into which the Debentures are
convertible. Thus, under certain circumstances, a decrease in the conversion
price for the Debentures may be taxable to a holder as a dividend to the extent
of the current or accumulated earnings and profits of the Company. In addition,
the failure to adjust fully the conversion price of the Debentures to reflect
distributions of stock dividends with respect to the Common Stock (or rights to
acquire Common Stock) may result in a taxable dividend to the holders of the
Common Stock and holders of rights to acquire Common Stock.
BACKUP WITHHOLDING
A holder of Preferred Stock, a Debenture or Common Stock issued upon
conversion of a Debenture may be subject to backup withholding at a rate of 31%
with respect to dividends or interest (including OID) on, or the proceeds of a
sale, exchange, or redemption of, such Preferred Stock, Debenture or Common
Stock, as the case may be, unless (i) such holder is a corporation or comes
within certain other exempt categories and, when required, demonstrates this
fact or (ii) provides a taxpayer identification number, certifies as to no loss
of exemption from backup withholding, and otherwise complies with applicable
backup withholding rules.
CERTAIN FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES PERSONS
The following is a general summary of the material United States federal
income and estate tax considerations relevant to the exchange of Preferred Stock
for Debentures by non-United States persons and the ownership, disposition and
conversion of Debentures by non-United States persons acquiring Debentures
pursuant to the Exchange Offer. To the extent it relates to matters of law or
legal conclusion, this summary constitutes the opinion of Debevoise & Plimpton,
special counsel to the Company. This summary is based on the Code, Treasury
Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, IRS rulings, official pronouncements and judicial
decisions, all as in effect on the date hereof and all of which are subject to
change, possibly with retroactive effect, or different interpretations. This
summary does not discuss all the tax consequences that may be relevant to a
particular holder that is a non-United States person in light of the holder's
particular circumstances and it is not intended to be applicable in all respects
to all categories of non-United States persons, some of whom -- such as foreign
governments and certain international organizations -- may be subject to special
rules not discussed below. In addition, this summary does not address any state,
local or foreign tax considerations that may be relevant to a holder's decision
to exchange Preferred Stock for Debentures pursuant to the Exchange Offer. For a
discussion of certain United States federal income tax considerations, some of
which may also be relevant to non-United States persons, see "Certain Federal
Income Tax Considerations".
As used herein, "non-United States person" means any person who, for United
States federal income tax purposes, is neither (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any State or of any of
its territories or possessions or (iii) a domestic trust or estate.
ALL PREFERRED STOCK HOLDERS THAT ARE NON-UNITED STATES PERSONS ARE ADVISED
TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF THE EXCHANGE OF PREFERRED STOCK FOR DEBENTURES AND
THE OWNERSHIP, CONVERSION AND DISPOSITION OF DEBENTURES RECEIVED IN THE EXCHANGE
IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
EXCHANGE OF PREFERRED STOCK FOR DEBENTURES
Subject to the discussion of backup withholding below, if a holder that is
a non-United States person proves, in a manner and under arrangements
satisfactory to the Company or other withholding agent that the exchange of
Preferred Stock for Debentures by such holder qualifies as a transaction in
which gain or loss is recognized, rather than as a dividend (see "Certain
Federal Income Tax Considerations -- Exchange of Preferred Stock for
Debentures", above), the Company or such withholding agent will not withhold
federal
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income tax on the issuance of Debentures to such holder and such holder
generally will not be subject to United States federal income tax in respect of
gain recognized on such exchange unless (i) such gain is effectively connected
with a trade or business conducted by such non-United States person within the
United States (in which case the branch profits tax may also apply if the holder
is a foreign corporation), (ii) in the case of a non-United States person that
is an individual, such holder is present in the United States for a period or
periods aggregating 183 days or more in the taxable year of the exchange and
certain other conditions are satisfied or (iii) the Company is or has been a
"United States real property holding corporation" for federal income tax
purposes within the five-year period ending on the date of the exchange (which
the Company does not believe it has been or is currently) and certain other
conditions are satisfied, and no treaty exception is applicable.
If a holder that is a non-United States person who exchanges Preferred
Stock for Debentures does not prove, in a manner satisfactory to the Company or
other withholding agent, that such exchange qualifies as a transaction in which
gain or loss is recognized, United States federal withholding tax will be
withheld from the gross proceeds to such holder in an amount equal to 30% of
such proceeds (including Debentures that such holder would otherwise have
received) unless such holder is eligible for a reduced tax treaty rate with
respect to dividend income, in which case the tax will be withheld at the
reduced rate, or establishes that it is exempt from such tax (e.g., by providing
the appropriate form certifying its status as a foreign government). Except as
may be otherwise provided in an applicable income tax treaty, a holder that is a
non-United States person will be taxed at ordinary federal income tax rates on a
net income basis if such dividend is effectively connected with the conduct of a
trade or business of such holder within the United States (in which case the
branch profits tax may also apply if the holder is a foreign corporation) and
will not be subject to the withholding tax described in the preceding sentence.
A holder that is a non-United States person may be eligible to obtain from the
IRS a refund of tax withheld if such holder meets one of the three tests of
Section 302 described above under "Certain Federal Income Tax
Considerations -- Exchange of Preferred Stock for Debentures" or is otherwise
able to establish that no tax (or a reduced amount of tax) was due.
PAYMENTS ON DEBENTURES
Subject to the discussion of backup withholding below, payments of
principal, premium (if any) and interest (including original issue discount) on
a Debenture by the Company or its agent (in its capacity as such) to a
beneficial owner that is a non-United States person will not be subject to
United States federal withholding tax; provided that (a) such person does not
actually or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote, (b) such person is not a
controlled foreign corporation that is related to the Company actually or
constructively through stock ownership, (c) such person is not a bank that
acquired its Debenture in consideration of an extension of credit made pursuant
to a loan agreement entered into in the ordinary course of business and (d)
either (i) the beneficial owner certifies to the Company or its agent, under
penalties of perjury, in a suitable form that it is a not a United States person
and provides its name and address or (ii) a qualifying securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business and that holds the
Debenture certifies to the Company or its agent under penalties of perjury that
such statement has been received from the beneficial owner in a suitable form by
it or by a qualifying intermediary and furnishes the payor with a copy thereof.
If a beneficial owner of a Debenture who is a non-United States person is
engaged in a trade or business within the United States and interest (including
original issue discount) and premium, if any, on the Debenture is effectively
connected with the conduct of such trade or business, such beneficial owner may
be subject to United States federal income tax on such interest (including
original issue discount) and premium at ordinary federal income tax rates on a
net basis (in which case the branch profits tax may also apply if the holder is
a foreign corporation).
CONVERSION OF DEBENTURE
An exchanging holder that is non-United States person generally will not be
subject to United States federal income tax on the conversion of Debentures
solely into Common Stock. To the extent such a holder
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receives cash in lieu of fractional shares of Common Stock, such payment will be
subject to the rules described below under " -- Sale or Exchange of Debentures
or Common Stock".
SALE OR EXCHANGE OF DEBENTURES OR COMMON STOCK
Subject to the discussion of backup withholding below, any capital gain
realized upon a sale or exchange of a Debenture (including upon retirement of a
Debenture) or Common Stock issued upon conversion of a Debenture by a beneficial
owner who is a non-United States person ordinarily will not be subject to United
States federal income tax unless (i) such gain is effectively connected with a
trade or business conducted by such non-United States person within the United
States (in which case the branch profits tax may also apply if the holder is a
foreign corporation), (ii) in the case of a non-United States person that is an
individual, such holder is present in the United States for a period or periods
aggregating 183 days or more in the taxable year of the sale or exchange and
certain other conditions are met or (iii) the Company is or has been a "United
States real property holding corporation" for federal income tax purposes (which
the Company does not believe it has been or is currently) and such non-United
States person has held, directly or constructively, more than 5% of the
outstanding Common Stock within the five-year period ending on the date of the
sale or exchange, and no treaty exception is applicable.
DIVIDENDS ON COMMON STOCK
Generally, any dividends paid on Common Stock received upon the conversion
of a Debenture will be subject to United States federal withholding tax at a
rate of 30% of the amount of the dividend, or at a lower applicable treaty rate.
However, if the dividend is effectively connected with a United States trade or
business of a holder that is a non-United States person, it will be subject to
United States federal income tax at ordinary federal income tax rates on a net
basis (in which case the branch profits tax may also apply if such holder is a
foreign corporation), rather than the 30% withholding tax.
Under current Treasury Regulations, a holder's status as a non-United
States person and eligibility for a tax treaty reduced rate of withholding will
be determined by reference to the holder's address and to any outstanding
certificates or statements concerning eligibility for a reduced rate of
withholding, unless facts and circumstances indicate that reliance is not
warranted. However, the IRS has issued Proposed Regulations that, if adopted in
final form, would require a non-United States person to provide certifications
under penalties of perjury in order to obtain treaty benefits.
FEDERAL ESTATE TAXES
Debentures beneficially owned by an individual who at the time of death is
neither a citizen nor a resident of the United States will not be subject to
United States federal estate tax as a result of such individual's death,
provided that at the time of death the income from the Debentures was not or
would not have been effectively connected with the conduct by such individual of
a trade or business within the United States and that such individual qualified
for the exemption from United States federal withholding tax (without regard to
the certification requirements) on premium and interest that is described above
under "-- Payments on Debentures".
Common Stock that is beneficially owned by an individual who is neither a
citizen nor a resident of the United States at the time of death will be
included in such holder's gross estate for United States federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting on IRS Form 1099 and backup withholding at a rate of
31% will not apply to payments of principal, premium (if any) and interest
(including original issue discount) made by the Company or a paying agent to a
non-United States holder on a Debenture if the certification described in clause
(d) under "-- Payments on Debentures" above is received, provided that the payor
does not have actual knowledge that the holder is a United States person.
However, interest (including original issue
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discount) on a Debenture owned by a holder that is a non-United States person
may be required to be reported annually on IRS Form 1042S.
Generally, dividends on Common Stock paid to holders that are non-United
States persons that are subject to the 30% or a reduced treaty rate of United
States federal withholding tax will be exempt from backup withholding tax.
Otherwise, backup withholding of United States federal income tax at a rate of
31% may apply to dividends paid with respect to Common Stock to holders that are
not "exempt recipients" and that fail to provide certain information (including
the holder's taxpayer identification number) in the manner required by United
States law and applicable regulations.
Payments of the proceeds from the sale by a holder that is a non-United
States person of a Debenture or Common Stock issued upon conversion of a
Debenture made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting may apply to such payments. Payments of the
proceeds from the sale of a Debenture or Common Stock to or through the United
States office of a broker is subject to information reporting and backup
withholding unless the holder certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
LEGAL OPINIONS
The validity of the Debentures will be passed upon for the Company by
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, and for the
Dealer Managers by Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022. Shearman & Sterling from time to time represents the Company with respect
to certain legal matters.
EXPERTS
The consolidated financial statements and schedules of the Company
appearing in the Company's Annual Report (Form 10-K) for the year ended December
31, 1993 have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedules are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
52
<PAGE> 55
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended, provides
in regard to indemnification of directors and officers as follows:
Sec. 145. Indemnification of officers, directors, employees and agents;
insurance
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2)
if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on
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<PAGE> 56
behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems
appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Article VII of the Company's By-Laws provides in regard to indemnification
of directors and officers as follows:
Section 1. Nature of Indemnity. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is
or was or has agreed to become a director or officer of the corporation, or
is or was serving or has agreed to serve at the request of the corporation
as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to
have been taken or omitted in such capacity, and may indemnify any person
who was or is a party or is threatened to be made a party to such an action
by reason of the fact that he is or was or has agreed to become an employee
or agent of the corporation, or is or was serving or has agreed to serve at
the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or on his
II-2
<PAGE> 57
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding had no reasonable cause to
believe his conduct was unlawful; except that in the case of an action or
suit by or in the right of the corporation to procure a judgment in its
favor (1) such indemnification shall be limited to expenses (including
attorneys' fees) actually and reasonably incurred by such person in the
defense or settlement of such action or suit, and (2) no indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless and
only to the extent that the Delaware Court of Chancery or the court in
which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such
other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
Section 2. Successful Defense. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Section 1 hereof or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
Section 3. Determination That Indemnification Is Proper. Any
indemnification of a director or officer of the corporation under Section 1
hereof (unless ordered by a court) shall be made by the corporation unless
a determination is made that indemnification of the director or officer is
not proper in the circumstances because he has not met the applicable
standard of conduct set forth in Section 1 hereof. Any indemnification of
an employee or agent of the corporation under Section 1 hereof (unless
ordered by a court) may be made by the corporation upon a determination
that indemnification of the employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set
forth in Section 1 hereof. Any such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors
who were not parties too such action, suit or proceeding or (2) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(3) by the stockholders.
Section 4. Advance Payment of Expenses. Expenses (including attorneys'
fees) incurred by a director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by
the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director
or officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized in
this Article. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any,
as the board of directors deems appropriate. The board of directors may
authorize the corporation's counsel to represent a director, officer,
employee or agent in any action, suit or proceeding, whether or not the
corporation is a party to such action, suit or proceeding.
Section 5. Procedure for Indemnification of Directors or Officers. Any
indemnification of a director or officer of the corporation under Sections
1 and 2, or advance of costs, charges and expenses of a director or officer
under Section 4 of this Article, shall be made promptly, and in any event
within 60 days, upon the written request of the director or officer. If the
corporation fails to respond within 60 days, then the request for
indemnification shall be deemed to be approved. The right to
indemnification or advances as granted by this Article shall be enforceable
by the director or officer in any court of competent jurisdiction if the
corporation denies such request, in whole or in part. Such persons's costs
and
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<PAGE> 58
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of costs,
charges and expenses under Section 4 of this Article where the required
undertaking, if any, has been received by the corporation) that the
claimant has not met the standard of conduct set forth in Section 1 of this
Article, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its board of
directors, its independent legal counsel, and its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he
has met the applicable standard of conduct set forth in Section 1 of this
Article, nor the fact that there has been an actual determination by the
corporation (including its board of directors, its independent legal
counsel and its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of
conduct.
Section 6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
corporation and each director, officer, employee and agent who serves in
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any
action, suit, or proceeding previously or thereafter brought or threatened
based in whole or in part upon any such state of facts. Such a "contract
right" may not be modified retroactively without the consent of such
director, officer, employee or agent.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators
of such a person.
Section 7. Insurance. The corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the corporation, or is or was serving at the request
of the corporation as director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this Article, provided that such insurance is
available on acceptable terms, which determination shall be made by a vote
of a majority of the entire board of directors.
Section 8. Savings Clause. If this Article or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify each director or officer and
may indemnify each employee or agent of the corporation as to costs,
charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an
action by or in the right of the corporation, to the full extent permitted
by any applicable portion of this Article that shall not have been
invalidated and to the full extent permitted by applicable law.
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<PAGE> 59
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
provides in regard to the limitation of liability of directors and officers
as follows:
(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the
certificate of incorporation may also contain any or all of the
following matters:
* * * *
(7) A provision eliminating or limiting the personal liability
of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that
such provision shall not eliminate or limit the liability of a
director: (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under section 174 of this Title; or (iv) for
any transaction from which the director derived an improper personal
benefit. No such provision shall eliminate or limit the liability of
a director for any act or omission occurring prior to the date when
such provision becomes effective. All references in this paragraph to
a director shall also be deemed to refer (x) to a member of the
governing body of a corporation which is not authorized to issue
capital stock, and (y) to such other person or persons, if any, who,
pursuant to a provision of the certificate of incorporation in
accordance with subsection (a) of sec. 141 of this title, exercise or
perform any of the powers or duties otherwise conferred or imposed
upon the board of directors by this title.
Article Ninth of the Company's Certificate of Incorporation provides in
regard to the limitation of liability of directors and officers as follows:
NINTH: No director of the corporation shall be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its shareholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
The Company's directors and officers are also insured against claims
arising out of the performance of their duties in such capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- ------------------ ------------------------------------------------------------------------
<S> <C>
4(a) -- Certificate of Incorporation of the Company, as amended.*
4(b) -- By-Laws of the Company, as amended.*
4(c) -- Form of Certificate of the Company's Common Stock, par value $1.00
per share (incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-3 No. 33-38393).*
4(d) -- Certificate of Designation of Series A Cumulative Convertible
Preferred Stock, without par value (included in Exhibit 4(a)).*
4(e) -- Rights Agreement between the Company and J. Henry Schroder Bank and
Trust Company, as Rights Agent, dated as of February 13, 1986
(incorporated by reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A (File No. 1-8400) dated February 19, 1986).*
</TABLE>
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<PAGE> 60
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- ---------------------------------------------------------------------------------------------
<S> <C>
4(f) -- Amendment to Rights Agreement, dated as of August 11, 1989, between
the Company and First Chicago Trust Company of New York (as successor
Rights Agent) (incorporated by reference to Exhibit 2 to the
Company's Registration Statement on Form 8, dated August 16, 1989, to
its Registration Statement on Form 8-A (File No. 1-8400) dated
February 19, 1986).*
4(g) -- Certificate of Designation of Series A Junior Participating Preferred
Stock, without par value (included in Exhibit 4(a)).*
4(h) -- Certificate of Increase, dated April 21, 1989, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(i) -- Certificate of Increase, dated July 24, 1990, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(j) -- Certificate of Increase, dated February 1, 1991, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(k) -- Certificate of Increase, dated January 13, 1992, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(l) -- Certificate of Increase, dated May 24, 1993, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(m) -- Form of Indenture between the Company and The First National Bank of
Chicago, as Trustee.*
4(n) -- Deposit Agreement, dated as of February 4, 1993, between the Company
and First Chicago Trust Company of New York, as Depositary, and the
Holders from time to time of the Depositary Receipts described
therein.*
5 -- Opinion of Debevoise & Plimpton as to the validity of the
Debentures.**
8 -- Tax opinion of Debevoise & Plimpton.**
12 -- Statement Re: Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.*
23(a) -- Consent of Ernst & Young LLP.
23(b) -- Consents of Debevoise & Plimpton (included in Exhibits 5 and 8).**
24 -- Powers of Attorney.*
25 -- Statement of Eligibility and Qualification of the Trustee under the
Trust Indenture Act of 1939.*
99(a) -- Proposed Form of Letter of Transmittal.
99(b) -- Proposed Form of Notice of Guaranteed Delivery.
99(c) -- Proposed Form of Letter to Registered Holders and DTC Participants.*
99(d) -- Proposed Form of Letter to Clients.*
99(e) -- Form of Exchange Agent Agreement.*
99(f) -- Form of Information Agent Agreement.*
99(g) -- Form of Newspaper Announcement.
</TABLE>
- ---------------
* Previously filed
** To be filed by amendment
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<PAGE> 61
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change in such information in the registration
statement:
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(6) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first-class mail or equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement throughout the date responding
to the request.
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
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<PAGE> 62
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AMR Corporation
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Fort
Worth, State of Texas, on this 4th day of October, 1994.
AMR CORPORATION
By /s/ ANNE H. MCNAMARA
Anne H. McNamara
Senior Vice President and General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- -------------------------- ---------------------------------
<S> <C> <C>
ROBERT L. CRANDALL Chairman of the Board, )
President and Chief Executive )
Officer; Director (Principal )
Executive Officer) )
)
DONALD J. CARTY Executive Vice President and )
Chief Financial Officer )
(Principal Financial and )
Accounting Officer) )
)
HOWARD P. ALLEN ) )
) )
EDWARD A. BRENNAN ) ) By /s/ ANNE H. MCNAMARA
) ) Anne H. McNamara
CHRISTOPHER F. EDLEY ) ) (Attorney-in Fact)
) ) Date: October 4, 1994
CHARLES T. FISHER, III ) )
) )
DEE J. KELLY ) Directors )
) )
ANN D. MCLAUGHLIN ) )
) )
JOE M. RODGERS ) )
) )
MAURICE SEGALL ) )
) )
EUGENE F. WILLIAMS, JR. ) )
</TABLE>
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<PAGE> 63
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -----------------------------------------------------------------------------------
<S> <C> <C>
4(a) -- Certificate of Incorporation of the Company, as amended.*
4(b) -- By-Laws of the Company, as amended.*
4(c) -- Form of Certificate of the Company's Common Stock, par value $1.00
per share (incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-3 No. 33-38393).*
4(d) -- Certificate of Designation of Series A Cumulative Convertible
Preferred Stock, without par value (included in Exhibit 4(a)).*
4(e) -- Rights Agreement between the Company and J. Henry Schroder Bank and
Trust Company, as Rights Agent, dated as of February 13, 1986
(incorporated by reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A (File No. 1-8400) dated February 19, 1986).*
4(f) -- Amendment to Rights Agreement, dated as of August 11, 1989, between
the Company and First Chicago Trust Company of New York (as successor
Rights Agent) (incorporated by reference to Exhibit 2 to the
Company's Registration Statement on Form 8, dated August 16, 1989, to
its Registration Statement on Form 8-A (File No. 1-8400) dated
February 19, 1986).*
4(g) -- Certificate of Designation of Series A Junior Participating Preferred
Stock, without par value (included in Exhibit 4(a)).*
4(h) -- Certificate of Increase, dated April 21, 1989, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(i) -- Certificate of Increase, dated July 24, 1990, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(j) -- Certificate of Increase, dated February 1, 1991, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(k) -- Certificate of Increase, dated January 13, 1992, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(l) -- Certificate of Increase, dated May 24, 1993, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(m) -- Form of Indenture between the Company and The First National Bank of
Chicago, as Trustee.*
4(n) -- Deposit Agreement, dated as of February 4, 1993, between the Company
and First Chicago Trust Company of New York, as Depositary, and the
Holders from time to time of the Depositary Receipts described
therein.*
5 -- Opinion of Debevoise & Plimpton as to the validity of the
Debentures.**
8 -- Tax opinion of Debevoise & Plimpton.**
12 -- Statement Re: Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.*
23(a) -- Consent of Ernst & Young LLP.
23(b) -- Consents of Debevoise & Plimpton (included in Exhibits 5 and 8).**
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -----------------------------------------------------------------------------------
<S> <C> <C>
24 -- Powers of Attorney.*
25 -- Statement of Eligibility and Qualification of the Trustee under the
Trust Indenture Act of 1939.*
99(a) -- Proposed Form of Letter of Transmittal.
99(b) -- Proposed Form of Notice of Guaranteed Delivery.
99(c) -- Proposed Form of Letter to Registered Holders and DTC Participants.*
99(d) -- Proposed Form of Letter to Clients.*
99(e) -- Form of Exchange Agent Agreement.*
99(f) -- Form of Information Agent Agreement.*
99(g) -- Form of Newspaper Announcement.
</TABLE>
- ---------------
* Previously filed
** To be filed by amendment
<PAGE> 1
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of AMR Corporation
for the registration of $1,100,000,000 of its convertible subordinated
debentures and to the incorporation by reference of our report dated February
15, 1994, with respect to the consolidated financial statements and schedules
of AMR Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1993, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Dallas, Texas
October 3, 1994
<PAGE> 1
LETTER OF TRANSMITTAL
FOR
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
(INCLUDING SERIES A CUMULATIVE
CONVERTIBLE PREFERRED STOCK REPRESENTED BY
$3.00 DEPOSITARY SHARES)
OF
AMR CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1994 (THE "EXPIRATION DATE") UNLESS EXTENDED
BY AMR CORPORATION
Exchange Agent:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
Tenders & Exchanges Tenders & Exchanges
Suite 4680 -- AMR P.O. Box 2565, Mail Suite 4660
14 Wall Street, 8th Floor Jersey City, NJ 07303-2565
New York, NY 10005
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated ,
1994 (the "Prospectus") of AMR Corporation (the "Company") which, together with
this Letter of Transmittal (the "Letter of Transmittal"), describes the
Company's offer (the "Exchange Offer") to exchange up to $1,100,000,000 of its
% Convertible Subordinated Quarterly Income Capital Securities due 2024
(the "Debentures") for shares of its Series A Cumulative Convertible Preferred
Stock (the "Preferred Stock") with a like aggregate liquidation preference.
Exchanges will be made on a basis of $1,000 principal amount of Debentures (the
minimum permitted denomination) for every two (2) shares of Preferred Stock
(liquidation preference $500 per share) validly tendered and accepted for
exchange in the Exchange Offer. The Company will pay amounts of less than $1,000
due to any exchanging shareholder in cash, in lieu of issuing Debentures with a
principal amount of less than $1,000. Tenders may also be made of Preferred
Stock represented by $3.00 Depositary Shares (the "Depositary Shares") issued
pursuant to a Deposit Agreement, dated February 4, 1993 (the "Deposit
Agreement"), between the Company, First Chicago Trust Company of New York (in
such capacity, the "Depositary") and holders from time to time of depositary
receipts (the "Depositary Receipts") representing Depositary Shares issued
thereunder. Each Depositary Share represents 1/10 of a share of Preferred Stock
and entitles the owner, proportionately, to all the rights and preferences of
the Preferred Stock represented thereby.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
<PAGE> 2
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND
THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE INFORMATION AGENT.
List below the Preferred Stock or Depositary Shares to which this Letter of
Transmittal relates. If the space provided below is inadequate, the Certificate
or Depositary Receipt Numbers and Numbers of Shares or Depositary Shares should
be listed on a separate signed schedule affixed hereto.
DESCRIPTION OF DEPOSITARY SHARES TENDERED HEREWITH
<TABLE>
- ----------------------------------------------------------------------------------------------------------
NUMBER OF
DEPOSITARY SHARES NUMBER OF
DEPOSITARY REPRESENTED BY DEPOSITARY
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) RECEIPT DEPOSITARY SHARES
(PLEASE FILL IN) NUMBER(S)* RECEIPT(S)* TENDERED**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full number of Depositary Shares represented by the tendered Depositary
Receipts. See Instruction 2.
DESCRIPTION OF PREFERRED STOCK TENDERED HEREWITH
<TABLE>
- ----------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED BY SHARES
(PLEASE FILL IN) NUMBER(S)* CERTIFICATE(S)* TENDERED**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full number of shares of Preferred Stock represented by the tendered
certificates. See Instruction 2.
This Letter of Transmittal is to be used either if certificates for
Preferred Stock or Depositary Receipts representing Depositary Shares are to be
forwarded herewith or if delivery of Preferred Stock or Depositary Shares is to
be made by book-entry transfer to an account maintained by the Exchange Agent at
The Depository Trust Company ("DTC"), pursuant to the procedures set forth in
"The Exchange Offer -- Procedures for Tendering" in the Prospectus. Although
delivery of Preferred Stock or Depositary Shares may be effected through
book-entry transfer into the Exchange Agent's account at DTC in accordance with
DTC's Automated Tender Offer Program ("ATOP") procedures, the tendering
shareholder's properly completed and duly executed Letter of Transmittal, with
any required signature guarantees, must, in any case, be received by the
Exchange Agent at its address set forth above prior to the Expiration Date or
the guaranteed delivery procedures described below must be complied with.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Preferred Stock or
Depositary Shares are registered on the books of the Company or any other person
who has obtained a properly completed stock power from the registered holder or
any person whose Preferred Stock or Depositary Shares are held of record by DTC
who desires to deliver such Preferred Stock or Depositary Shares by book-entry
transfer at DTC.
2
<PAGE> 3
Holders whose Preferred Stock or Depositary Shares are not immediately
available or who cannot deliver their Preferred Stock or Depositary Shares and
all other documents required hereby to the Exchange Agent prior to the
Expiration Date may tender their Preferred Stock or Depositary Shares according
to the guaranteed delivery procedure set forth in the Prospectus under the
caption "The Exchange Offer -- Procedures for Tendering -- Guaranteed Delivery."
/ / CHECK HERE IF TENDERED PREFERRED STOCK OR DEPOSITARY SHARES ARE BEING
DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH THE DEPOSITORY TRUST COMPANY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: ____________________________________________
The Depository Trust Company
Account Number: __________________________ Transaction Code Number: ______
/ / CHECK HERE IF TENDERED PREFERRED STOCK OR DEPOSITARY SHARES ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s): __________________________________________
Name of Eligible Institution
that Guaranteed Delivery: _______________________________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER:
Account Number: ___________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described Preferred Stock or
Depositary Shares. Subject to, and effective upon, the acceptance for exchange
of the Preferred Stock or Depositary Shares tendered herewith, the undersigned
hereby exchanges, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to such Preferred Stock or Depositary
Shares. The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney-in-fact of the undersigned (with
full knowledge that said Exchange Agent acts as the agent of the undersigned in
connection with the Exchange Offer) to cause the Preferred Stock or Depositary
Shares to be assigned, transferred and exchanged. In particular, the undersigned
specifically authorizes the Exchange Agent to withdraw under the Deposit
Agreement the Preferred Stock underlying any Depositary Shares tendered
herewith, and to tender such underlying Preferred Stock in the Exchange Offer.
However, the Exchange Agent shall not withdraw Preferred Stock underlying
Depositary Shares tendered herewith unless such Preferred Stock is to be
accepted for exchange by the Company. The undersigned represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Preferred Stock or Depositary Shares and to acquire Debentures issuable upon
the exchange of such tendered Preferred Stock or Depositary Shares, and that,
when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered Preferred Stock or Depositary Shares, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Preferred Stock or Depositary Shares or transfer ownership
of such Preferred Stock or Depositary Shares on the account books maintained by
DTC. All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
3
<PAGE> 4
The Company has expressly reserved the right to amend or modify the terms
of the Exchange Offer in any manner, or to withdraw or terminate the Exchange
Offer, at any time for any reason. The undersigned recognizes that as a result
of the foregoing, the Company may not be required to exchange any of the
Preferred Stock or Depositary Shares tendered hereby and, in such event, the
Preferred Stock or Depositary Shares not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
Tendered Preferred Stock or Depositary Shares may be withdrawn at any time prior
to the Expiration Date and, unless accepted for exchange by the Company, may be
withdrawn at any time after 40 business days after the date of the Prospectus.
Certificates for all Debentures delivered in exchange for tendered
Preferred Stock or Depositary Shares and any Preferred Stock or Depositary
Shares delivered herewith but not exchanged, in each case registered in the name
of the undersigned, shall be delivered to the undersigned at the address shown
below the signature of the undersigned.
TENDERING HOLDER(S) SIGN HERE
(Complete Accompanying Substitute Form W-9)
________________________________________________________________________________
________________________________________________________________________________
Signature of Holder(s)
Dated:_____________, 1994
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Preferred Stock or Depositary Receipts representing
Depositary Shares or by any person(s) authorized to become registered holder(s)
by endorsements and documents transmitted herewith or, if the Preferred Stock or
Depositary Shares are held of record by DTC, the person in whose name such
Preferred Stock or Depositary Shares are registered on the books of DTC. If
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, please set forth the full title of such person.) See Instruction 3.
Name(s):________________________________________________________________________
________________________________________________________________________
(Please Print)
Capacity (full title):__________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
(Including Zip Code)
Area Code and Telephone No._____________________________________________________
Taxpayer Identification No._____________________________________________________
GUARANTEE OF SIGNATURE(S)
(If Required -- See Instruction 3)
Authorized Signature:___________________________________________________________
Name:___________________________________________________________________________
Title:__________________________________________________________________________
Address:________________________________________________________________________
Name of Firm:___________________________________________________________________
Area Code and Telephone No._____________________________________________________
Dated:_____________, 1994
4
<PAGE> 5
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 3, 4 and 11)
To be completed ONLY if the Debentures for the certificates of Preferred Shares
or Depositary Receipts representing Depositary Shares are to be issued in the
name of someone other than the tendering holder.
Issue the Debentures to:
Name(s): _______________________________________________________________________
(Please Print)
Address: _______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(Including Zip Code)
Taxpayer Identification No.: ___________________________________________________
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates or
Depositary Receipts for all physically delivered Preferred Stock or Depositary
Shares, respectively, as well as a properly completed and duly executed copy of
this Letter of Transmittal or facsimile thereof, and any other documents
required by this Letter of Transmittal, or confirmation of any book-entry
transfer to the Exchange Agent's account at DTC of Preferred Stock or Depositary
Shares tendered by book-entry transfer, must be received by the Exchange Agent
at either of its addresses set forth herein prior to the Expiration Date (as
defined in the Prospectus).
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE PREFERRED STOCK
OR DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND
RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY
IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, BE USED.
Holders whose Preferred Stock or Depositary Shares are not immediately
available or who cannot deliver their Preferred Stock or Depositary Shares and
all other required documents to the Exchange Agent prior to the Expiration Date
or comply with book-entry transfer procedures on a timely basis may tender their
Preferred Stock or Depositary Shares pursuant to the guaranteed delivery
procedure set forth in the Prospectus under "The Exchange Offer -- Procedures
for Tendering -- Guaranteed Delivery." Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution (as defined in
Instruction 3); (ii) on or prior to the Expiration Date the Exchange Agent must
have received from such Eligible Institution a letter, telegram or facsimile
transmission setting forth the name and address of the tendering holder, the
names in which such Preferred Stock or Depositary Shares are registered, and, if
possible, the certificate or Depositary Receipt numbers of the Preferred Stock
or Depositary Shares, respectively, to be tendered; and (iii) all tendered
Preferred Stock or Depositary Shares as well as this Letter of Transmittal and
all other documents required by this Letter of Transmittal, or a confirmation of
any book-entry transfer of such Preferred Stock or Depositary Shares into the
Exchange Agent's account at DTC, must be received by the Exchange Agent within
five New York Stock Exchange trading days after the date of execution of such
letter, telegram or facsimile transmission, all as provided in the Prospectus
under the caption "The Exchange Offer -- Procedures for Tendering -- Guaranteed
Delivery."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Preferred Stock or Depositary Shares for exchange.
2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire number of shares
of Preferred Stock or Depositary Shares evidenced by a submitted certificate or
Depositary Receipt, respectively, is tendered, the tendering holder must fill in
the number of shares of Preferred Stock or Depositary Shares tendered in the box
entitled "Number of Shares (Depositary Shares) Tendered." A newly issued
certificate for Preferred Stock or Depositary Receipt for Depositary Shares
submitted but not tendered will be sent to such holder as soon as practicable
after the Expiration Date. All Preferred Stock or Depositary Shares delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
Tenders of Preferred Stock or Depositary Shares pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration Date and, unless
accepted for exchange by the Company, may be withdrawn at any time after 40
business days after the date of the Prospectus. To be effective, a written
notice of withdrawal delivered by hand, mail delivery or facsimile transmission
must be timely received by the Exchange Agent. Any such notice of withdrawal
must specify the person named in the Letter of Transmittal as having tendered
Preferred Stock or Depositary Shares to be withdrawn, the certificate or
Depositary Receipt numbers of the Preferred Stock or Depositary Shares,
respectively, to be withdrawn, the number of shares of Preferred Stock or
Depositary Shares delivered for exchange, a statement that such a holder is
withdrawing its election to have such Preferred Stock or Depositary Shares
exchanged, and the name of the registered holder of such Preferred Stock or
Depositary Shares, and must be signed by the holder in the same manner as the
original signature on this Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Preferred Stock or Depositary Shares being withdrawn. The Exchange Agent
will return properly withdrawn Preferred Stock or Depositary Shares promptly
following receipt of notice of withdrawal. All questions as to the validity of
notice of withdrawal, including time of receipt, will be determined by the
Company, and such determination will be final and binding on all parties.
Withdrawals of tenders of Preferred Stock or Depositary Shares may not be
rescinded and any Preferred Stock or Depositary Shares withdrawn will thereafter
be deemed not validly tendered for purposes of the Exchange Offer. Properly
withdrawn Preferred Stock or Depositary Shares, however, may be retendered by
following the procedures therefor at any time prior to the Expiration Date.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered holder(s) of the Preferred Stock or Depositary Shares tendered
hereby, the signature must correspond with the name(s) as written on the face of
the certificates for Preferred Stock or
6
<PAGE> 7
Depositary Receipts representing Depositary Shares, respectively, without
alteration, enlargement or any change whatsoever.
If any of the Preferred Stock or Depositary Shares tendered hereby are
owned of record by two or more joint owners, all such owners must sign this
Letter of Transmittal.
If a number of shares of Preferred Stock or Depositary Shares registered in
different names are tendered, it will be necessary to complete, sign and submit
as many separate copies of this Letter of Transmittal as there are different
registrations of Preferred Stock or Depositary Shares.
When this Letter of Transmittal is signed by the registered holder or
holders of Preferred Stock or Depositary Shares listed and tendered hereby, no
endorsements of certificates or Depositary Receipts or separate written
instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Preferred Stock or Depositary Shares listed,
such Preferred Stock or Depositary Shares must be endorsed or accompanied by
separate written instruments of transfer or exchange in form satisfactory to the
Company and duly executed by the registered holder, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the Preferred Stock or Depositary Shares.
If this Letter of Transmittal, any certificates or Depositary Receipts or
separate written instruments of transfer or exchange are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority so to act must be
submitted.
Endorsements on certificates or Depositary Receipts or signatures on
separate written instruments of transfer or exchange required by this
Instruction 3 must be guaranteed by a financial institution (including most
banks, savings and loans associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program or The New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (any of the foregoing hereinafter referred to as an "Eligible
Institution").
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Preferred Stock or Depositary Shares are
tendered: (i) by a registered holder of such Preferred Stock or Depositary
Shares; or (ii) for the account of an Eligible Institution.
4. TRANSFER TAXES. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Preferred Stock or Depositary Shares
to it or its order pursuant to the Exchange Offer. If, however, Debentures are
to be delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Preferred Stock or Depositary Shares
tendered hereby, or if a transfer tax is imposed for any reason other than the
transfer of Preferred Stock or Depositary Shares to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other person) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exception
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the certificates for Preferred Stock or
Depositary Receipts representing Depositary Shares, respectively, listed in this
Letter of Transmittal.
5. EXTENSIONS, AMENDMENTS AND TERMINATION. The Company expressly reserves
the right to extend, amend or modify the terms of the Exchange Offer in any
manner and withdraw or terminate the Exchange Offer and not accept for exchange
any Preferred Stock, at any time for any reason, including (without limitation)
if fewer than 400,000 shares of Preferred Stock are tendered (which condition
may be waived by the Company).
6. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any holder whose Preferred
Stock or Depositary Shares have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated below for further
instructions.
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the addresses and telephone number set forth above. In addition, all
questions relating to the Exchange Offer, as well as requests for assistance or
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to D.F. King & Co., Inc., the Information Agent for the Exchange Offer,
at 77 Water Street, New York, New York 10005, telephone (800) 347-7869.
8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or
Preferred Stock or Depositary Shares will be resolved by the Company, and such
determination will be final and binding on all parties. The Company reserves the
absolute right to reject any or all Letters of Transmittal or tenders that are
not in proper form or the acceptance of which would, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to the particular Preferred Stock or
Depositary Shares covered by any Letter of Transmittal or tendered pursuant to
such letter. None of the Company, the Exchange Agent or any other person will be
under any duty to give notification of any defects or
7
<PAGE> 8
irregularities in tenders or incur any liability for failure to give any such
notification. The Company's interpretation of the terms and conditions of the
Exchange Offer shall be final and binding on all parties.
9. SUBSTITUTE FORM W-9. Except as described below under "Important Tax
Information", Federal income tax laws require each tendering holder to provide
the Company with a correct taxpayer identification number ("TIN") on the
Substitute Form W-9 which is provided below, and to indicate whether or not the
holder is not subject to backup withholding by crossing out Part 2 on the
Substitute Form W-9 if the holder is currently subject to backup withholding.
Failure to provide the information on the Form or to cross out Part 2 of the
Form (if applicable) may subject the tendering holder to 31% federal income tax
withholding on payments made to the holder. The box in Part 3 of the Form may be
checked if the tendering holder has not been issued a TIN and has applied for a
TIN or intends to apply for a TIN in the near future. If the box in Part 3 is
checked and the holder is not provided with a TIN within sixty (60) days, the
Company will withhold 31% on all such payments thereafter until a TIN is
provided to the Company.
10. WITHHOLDING ON FOREIGN HOLDERS IN CONNECTION WITH THE EXCHANGE
OFFER. United States Federal income tax generally will be withheld from the
gross proceeds payable to a holder that is a non-United States person (a
"foreign holder") (including Debentures that such foreign holder would otherwise
be entitled to receive) unless such foreign holder provides the Exchange Agent
with a Foreign Holder Certification, in form and substance satisfactory to the
Company, in which such holder certifies that such holder's exchange of Preferred
Stock for Debentures pursuant to the Exchange Offer qualifies as a sale or
exchange, rather than as a dividend, for Federal income tax purposes (as
described in "Certain Federal Tax Considerations for Foreign Holders -- Exchange
of Preferred Stock for Debentures" in the Prospectus) and such holder agrees
that it will provide additional information to the Company if necessary to
demonstrate such qualification and that it will reimburse the Company if it is
determined that Federal withholding tax was due. The withholding rate is
ordinarily 30% unless the foreign holder is eligible for a reduced tax treaty
rate with respect to dividend income, in which case withholding will be made at
the reduced treaty rate, or the foreign holder otherwise establishes to the
satisfaction of the withholding agent that such holder is exempt from tax on
such exchange (e.g., by certifying to the withholding agent on IRS Form 8709 as
to such holder's status as a foreign government). For this purpose, a non-United
States person is any person that is not (i) an individual citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof or (iii) any estate or trust the income of which is subject to United
States Federal income taxation regardless of the source of such income. Copies
of the Foreign Holder Certification are available from the Exchange Agent. A
shareholder's status as a foreign holder and eligibility for a tax treaty
reduced rate of withholding will be determined by reference to the shareholder's
address and to any outstanding certificates (i.e., Form W-8 or substitute) or
statements concerning eligibility for a reduced rate of withholding, unless
facts and circumstances indicate that reliance is not warranted. EACH FOREIGN
HOLDER SHOULD CONSULT WITH ITS TAX ADVISOR REGARDING THE FOREGOING.
A holder that exchanges Preferred Stock for Debentures on behalf of a
beneficial owner that is a non-United States person will be responsible for
determining whether and what rate of withholding is required on such exchange
and for obtaining any required forms or certifications from such beneficial
owner.
A foreign holder may be eligible to obtain from the U.S. Internal Revenue
Service a refund of any tax withheld if such shareholder meets one of the three
tests for sale or exchange treatment described in "Certain Federal Tax
Considerations for Foreign Holders -- Exchange of Preferred Stock for
Debentures" in the Prospectus or otherwise is able to establish that no tax (or
a reduced amount of tax) was due.
11. SPECIAL ISSUANCE INSTRUCTIONS. If the Debentures for the certificates
of Preferred Shares or Depositary Receipts representing Depositary Shares are to
be issued in the name of someone other than the tendering holder, the tendering
holder must fill in the information in the box entitled "Special Issuance
Instructions."
12. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES FOR PREFERRED STOCK OR DEPOSITARY RECEIPTS REPRESENTING DEPOSITARY
SHARES AND ALL OTHER REQUIRED DOCUMENTS) OR CONFIRMATION OF BOOK-ENTRY TRANSFER
OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR
TO THE EXPIRATION DATE.
8
<PAGE> 9
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Preferred Stock or
Depositary Shares are accepted for exchange is required to provide the Company
with such holder's correct taxpayer identification number ("TIN") on Substitute
Form W-9. If a holder is an individual, the TIN is the holder's social security
number. If the Company is not provided with the correct TIN, the holder may be
subject to a penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such holder with respect to Debentures acquired
pursuant to the Exchange Offer may be subject to backup withholding.
If backup withholding applies, the Company is required to withhold 31% of
all payments made to the holder. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
To prevent backup withholding on payments that are made to a holder with
respect to Debentures, the holder is required to notify the Company of his or
its correct TIN by completing the Form below, certifying that the TIN provided
on Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and
whether or not (i) the holder has not been notified by the Internal Revenue
Service that the holder is subject to backup withholding as a result of a
failure to report all interest or dividends or (ii) the Internal Revenue Service
has notified the holder that the holder is no longer subject to backup
withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements. A
corporation must, however, complete the Substitute Form W-9, including providing
its TIN (unless it is a foreign corporation that does not have a TIN) and
indicating that it is exempt from backup withholding, in order to establish its
exemption from backup withholding. A foreign corporation or individual, or other
foreign person, must submit a statement (i.e., Form W-8 or substitute), signed
under penalties of perjury, attesting to such person's status as a non-United
States person. Such statements can be obtained from the Exchange Agent.
See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
9
<PAGE> 10
<TABLE>
<S> <C> <C> <C>
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PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- -------------------------------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN SOCIAL SECURITY NUMBER
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY OR _____________________________________________
BY SIGNING AND DATING BELOW EMPLOYER IDENTIFICATION NUMBER
------------------------------------------------------------------------------------------------
FORM W-9 PART 2 -- I am not subject to backup withholding because (i) I am FOR PAYEES EXEMPT FROM
DEPARTMENT OF THE TREASURY exempt from backup withholding, or (ii) I have not been notified by BACKUP WITHHOLDING
INTERNAL REVENUE SERVICE the IRS that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup withholding. (YOU Write "EXEMPT" if you are
MUST CROSS OUT THIS PART 2 IF YOU ARE CURRENTLY SUBJECT TO BACKUP exempt from backup
WITHHOLDING BECAUSE OF UNDERREPORTING OF INTEREST OR DIVIDENDS ON withholding.
YOUR TAX RETURN.)
------------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE PART 3 --
TAXPAYER IDENTIFICATION INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
NUMBER (TIN)
SIGNATURE ___________________________________ DATE _________________ Awaiting TIN / /
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
CERTIFICATE OF TAXPAYER AWAITING TIN
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to appropriate Internal
Revenue Service Center or Social Security Administration Office, or (b) I intend
to mail or deliver an application in the near future. I understand that if I do
not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
_________________________________ __________________________________
Signature Date
10
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
(INCLUDING SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
REPRESENTED BY $3.00 DEPOSITARY SHARES)
IN EXCHANGE FOR
% CONVERTIBLE SUBORDINATED QUARTERLY INCOME CAPITAL SECURITIES DUE 2024
OF
AMR CORPORATION
Registered holders of outstanding Series A Cumulative Convertible Preferred
Stock, of AMR Corporation (the "Preferred Stock"), including registered holders
of $3.00 Depositary Shares (the "Depositary Shares") (each of which represents
1/10 of a share of Preferred Stock), who wish to tender Preferred Stock or
Depositary Shares in exchange for AMR Corporation's % Convertible
Subordinated Quarterly Income Capital Securities due 2024 (the "Debentures") on
a basis of $1,000 principal amount of Debentures for every two (2) shares of
Preferred Stock (liquidation preference $500 per share) accepted for exchange,
on the terms and subject to the conditions set forth in AMR Corporation's
Prospectus, dated , 1994 and the related Letter of Transmittal and,
in each case, whose Preferred Stock or Depositary Shares are not immediately
available or who cannot deliver their Preferred Stock or Depositary Shares and
Letter of Transmittal (and any other documents required by the Letter of
Transmittal) to First Chicago Trust Company of New York (the "Exchange Agent")
prior to the Expiration Date, may use this Notice of Guaranteed Delivery or one
substantially equivalent hereto. This Notice of Guaranteed Delivery may be
delivered by hand or sent by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight delivery) or mail to
the Exchange Agent. See "The Exchange Offer -- Procedures for Tendering" in the
Prospectus.
The Exchange Agent for the Exchange Offer is:
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
First Chicago Trust Company of New York Tenders & Exchanges
Tenders & Exchanges Suite 4680 -- AMR
P. O. Box 2565, Mail Suite 4660 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2565 New York, NY 10005
</TABLE>
By Facsimile:
(For Eligible Institutions Only)
(201) 222-4720 or (201) 222-4721
Confirm Receipt of Notice of
Guaranteed Delivery by Telephone:
(201) 222-4707
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission to
a number other than as set forth above will not constitute a valid delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION, SUCH SIGNATURE GUARANTEE MUST APPEAR IN
THE APPLICABLE SPACE PROVIDED ON THE LETTER OF TRANSMITTAL FOR GUARANTEE OF
SIGNATURES.
<PAGE> 2
Ladies and Gentlemen:
The Undersigned hereby tenders the number of shares of Preferred Stock or
Depositary Shares indicated below, upon the terms and subject to the conditions
contained in the Prospectus dated , 1994, of AMR Corporation (the
"Prospectus"), receipt of which is hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
DEPOSITARY SHARES
- -------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF REGISTERED HOLDER AS IT
APPEARS ON THE DEPOSITARY RECEIPT
DEPOSITARY RECEIPT(S) FOR NUMBER(S) OF NUMBER OF
DEPOSITARY SHARES DEPOSITARY DEPOSITARY
(PLEASE PRINT) SHARES TENDERED SHARES TENDERED
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK
- -------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF REGISTERED HOLDER AS IT
APPEARS ON THE
CERTIFICATE(S) FOR CERTIFICATE NUMBER(S) OF NUMBER OF SHARES
PREFERRED STOCK PREFERRED OF PREFERRED
(PLEASE PRINT) STOCK TENDERED STOCK TENDERED
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch,
agency or correspondent in the United States, hereby guarantees to deliver to
the Exchange Agent at one of its addresses set forth above, the certificates
representing the Preferred Stock or Depositary Receipts representing the
Depositary Shares, together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
and any other documents required by the Letter of Transmittal within five New
York Stock Exchange, Inc. trading days after the date of execution of this
Notice of Guaranteed Delivery.
<TABLE>
<S> <C>
______________________________________________ ________________________________________________
Name of Firm Authorized Signature
______________________________________________ ________________________________________________
Address Title
Name:___________________________________________
______________________________________________ (Please Type or Print)
Zip Code
Area Code and Telephone Number:_______________ Dated:__________________________________________
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR PREFERRED STOCK OR DEPOSITARY RECEIPTS
REPRESENTING DEPOSITARY SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY.
CERTIFICATES FOR PREFERRED STOCK OR DEPOSITARY RECEIPTS REPRESENTING
DEPOSITARY SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
This is neither an offer to exchange or to sell nor a solicitation of an offer
to exchange or buy any of these securities. The Exchange Offer is made only
by the Prospectus and the related Letter of Transmittal, and the Exchange
Offer is not being made to, nor will tenders be accepted from, holders
of these securities in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
NOTICE OF EXCHANGE OFFER TO HOLDERS OF
AMR CORPORATION
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
AMR Corporation ("AMR") is offering, upon the terms and subject to the
conditions contained in its Prospectus dated , 1994 and the related
Letter of Transmittal (collectively, the "Exchange Offer"), to exchange up to
$1,100,000,000 aggregate principal amount of debentures designated as its %
Convertible Subordinated Quarterly Income Capital Securities due 2024 (the
"Debentures") for up to all of AMR's outstanding Series A Cumulative Convertible
Preferred Stock (the "Preferred Stock"). The Exchange Offer will be effected on
a basis of $1,000 principal amount of the Debentures for every two (2) shares of
Preferred Stock validly tendered and accepted for exchange. Ownership of the
Preferred Stock may be evidenced by certain $3.00 Depositary Shares (the
"Depositary Shares"). Each Depositary Share represents 1/10th of a share of
Preferred Stock, and entitles the owner, proportionately, to all of the rights
and preferences of the Preferred Stock represented thereby. Either Depositary
Shares or Preferred Stock may be tendered in the Exchange Offer.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS PERIOD WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , , 1994, OR IF EXTENDED BY AMR, IN ITS
SOLE DISCRETION, THE LATEST DATE AND TIME TO WHICH EXTENDED
(THE "EXPIRATION DATE").
Upon the terms and subject to the conditions of the Exchange Offer, AMR will
accept any and all shares of Preferred Stock validly tendered and not withdrawn
prior to the Expiration Date. Tenders of Preferred Stock pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date and,
unless accepted for exchange by AMR, may be withdrawn at any time after forty
business days after (date of Prospectus).
In any jurisdiction where the securities or blue sky laws require the Exchange
Offer to be made by a licensed broker or dealer, the Exchange Offer is being
made on behalf of AMR by one or more brokers or dealers which are licensed under
the laws of such jurisdiction.
THE PROSPECTUS AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH
SHOULD BE READ BEFORE ANY ACTION IS TAKEN BY HOLDERS OF PREFERRED STOCK. TENDERS
MAY BE MADE ONLY BY A PROPERLY COMPLETED AND EXECUTED LETTER OF TRANSMITTAL AND
IN CONFORMANCE WITH THE TERMS THEREOF.
Questions or requests for assistance or for additional copies of the Prospectus
or of the Letter of Transmittal and requests for additional copies of the Notice
of Guaranteed Delivery may be directed to the Information Agent at the address
and telephone numbers set forth below:
THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550 (collect)
or
(800) 347-7869
THE DEALER MANAGERS FOR THE EXCHANGE OFFER ARE:
LEHMAN BROTHERS GOLDMAN, SACHS & CO.
, 1994
